Apparel manufacturing stocks slumped on Wednesday after Capri Holdings ( NYSE: CPRI ) missed quarterly expectations and reduced full-year guidance.
Shares of Capri Holdings ( CPRI ) cratered over 25% lower on Wednesday, owing to macroeconomic headwinds and still-elevated inventories that portend a prolonged promotional environment.
Commentary on margin compression and an even larger increase in inventory levels from Under Armour ( UAA ) -4.92% on Wednesday morning added to this concern. The latter stock initially jumped sharply upward due to a beat and raise on expectations , before margin and inventory concerns appeared to erode market optimism.
“We definitely have seen that the promotional environment went a little bit deeper and we believe it's going to go a little bit longer. And a lot of that has to do with some of the building inventories that are out there with all the brands,” Under Armour CFO Dave Bergman told analysts during a call on Wednesday. “That is something that all of the retailers are going to need to work through in the coming quarters.”
The overhang on the industry, coupled with the forecast of continued pressure on consumers, weighed on much of the retail sector ( XRT ) on Wednesday.
Notable decliners included PVH Corp. ( PVH ) -7% , Ralph Lauren ( RL ) -4.72% , Hanesbrands ( HBI ) -3.72% , Canada Goose ( GOOS ) -4.94% , Kontoor Brands ( KTB ) -2.93% , and Oxford Industries ( OXM ) -2.55% .
Read more on why Barclays is bullish on a retail recovery .
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Capri Holdings crash drags on apparel industry peers