Great ResignationInflationSupply ChainsLeadership

From 26% Drops to 22% Gains, Clothing Stocks Have Gone Wild

August 23, 2017, 2:46 PM UTC

U.S. retail stocks have been wildly volatile for years.

Now that turbulence is spreading to their close cousins, apparel stocks. Name a major company in the sector and chances are it’s posted an eye-catching tumble — or in some instances, gain — at some point this year.

Coach plunged 15 percent one day last week. Michael Kors soared 22 percent in early August, six months after sinking 11 percent in one day. And back in January, Under Armour’s two share classes tanked 23 percent and 26 percent.

A further reminder of volatility in the industry came today after new earnings reports. American Eagle Outfitters Inc. surged more than 7 percent and Express Inc. was up almost 15 percent after both posted sales that exceeded expectations

The swings stand out even more because the broad market has been remarkably calm this year. Daily moves exceeding 1 percent in the S&P 500 are rare and trading volumes have declined. By contrast, stocks in the S&P 500 Apparel Retail Index are changing hands at the fastest clip since 2012 — an average of 700,000 times more a week than they did last year. All this underscores the struggles of brick-and-mortar apparel and retailing companies that have been upended by fickle consumers and online competitors such as Amazon.

Clothing and consumer durable companies have accounted for 15 of the 100 biggest one-day up or down moves in the S&P 500 Index this year. Only the retail industry, including Macy’s and Nordstrom, has contributed more, at 21.

Under Armour has the distinction of posting apparel’s biggest negative move. Its stock fell after its sales forecast missed analysts’ estimates.

A handful of apparel companies have been rewarded with big rallies when there’s any indication of success in combating online rivals. Michael Kors posted the largest one-day advance of any stock in the sector, surging on Aug. 8 after its first-quarter results beat expectations. That was seen as a sign of progress to get customers to pay full price. Ralph Lauren surged 13 percent on the same day, for a similar reason.

This year’s 15 big swings are a departure for apparel stocks. Over the previous five years, they had never accounted for more than eight of the biggest moves in the S&P 500. Retail stocks, on the other hand, have been at the top — or near the top — of this list each year since 2012.