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Fashion Industry Stocks Rode the Wall Street Waves in 2018 as Trade Woes Cut Deep

U.S.-based retail, apparel and footwear stocks rode the Wall Street roller coaster in 2018, generally following the path of the market.

Shares of many of the top publicly traded retailers and brands followed similar patterns during the year. They rose steadily during the first half of the year and peaked somewhere between the third quarter of the calendar year and late November, before dropping during the horrid December market performance. Analysts blamed factors such as the U.S.-China trade war and threat of 25 percent tariffs on Chinese apparel and footwear imports, forecasts of a slowdown in the U.S. economy, and the current partial shutdown of the federal government for the recent decline.

Moody’s Investor Service’s 2019 outlook for the retail and apparel sector issued earlier this month said after a difficult period that saw a slew of bankruptcies and adaptation to omnichannel challenges, U.S. retail is beginning to reap the rewards of investments in e-commerce and operating efficiencies.

Among major retailers, Amazon bucked the trend and its stock closed at 1,478.02 on Friday, up from 1,448.69 a year earlier, but down from over 2,000 in September. Macy’s Inc. was also up from a year ago, closing at 30.03 compared to 26.46, as did TJX Cos., finishing the day at 43.80 from 38.99. But both stocks lost more than 20 percent of their value from recent peaks.

Target Corp. closed at 64.94 on Friday compared to 73.88 a year earlier, while Walmart’s stock ended the day at 92.09 from 101.70 a year ago. Kohl’s Corp. stock was down to 65.08 on Friday compared to 65.61 a year ago and Gap Inc. closed at 25.63 compared to 33.33, while J.C. Penney Co.’s stock was down to 1.02 on the day from 3.01 last year.

American apparel companies are benefiting from the retail revival, as well as from cost savings initiatives and acquisition synergies, Moody’s said. But Moody’s also warned that tariffs could dampen momentum, as could potential increases in labor and freight costs.

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A November Moody’s report upgraded the outlook for the U.S. apparel and footwear sector to positive from stable, thanks to higher-than-expected earnings across the companies it tracks. But that was before the December swoon that was one of the worst months for the stock market since either the Great Recession or Great Depression, depending on the exchange.

Most major apparel and footwear companies lost significant value over the year, although some were set for year-to-year gains before the recent downslide.

Significant declines over the year were posted by PVH Corp., which closed at 92.32 on Friday compared to 151.55 from the end of December 2017; Michael Kors Holdings, which ended the day at 37.18 from 64.73; and Hanesbrands Inc., which closed at 12.20 from 20.49.

Less severe annualized declines were posted by VF Corp., with its stock closing at 70.54 on Friday from 83.74, and Ralph Lauren Corp., down to 101.81 from 106.95. Nike Inc.’s stock was up to 73.32 on the day from 68.30 a year ago, while Under Armour’s shares reached 16.00 compared to 15.78.