Guess IPO has weak start
|
|
August 8, 1996: 6:48 p.m. ET
Analysts: slowing retail sales have dragged down apparel stocks
From Correspondent Sean Callebs
|
NEW YORK (CNNfn) -- Clothier Guess Inc.'s shares began trading Thursday on the New York Stock Exchange, faring about as well as analysts predicted -- relatively poorly.
The stock, priced at $18 a share, opened at $18 and pretty much stayed there all day, closing unchanged.
Some analysts wondered why Guess moved ahead with its initial public offering despite forecasts of an anemic showing.
The clothing firm originally hoped to sell 9 million shares of stock for about $18 to $20 each.
However, the company scaled back the offering to 7 million shares amid lackluster demand.
Underwriters also priced the IPO at $18 a share -- the low end of the deal's expected range.
Analysts said a scandal involving the company's alleged use of low-paid, illegal garment assembly might have contributed to the weak results.
David Menlow, president of IPO Financial Network, said he though Guess' experience showed that "if a company is not squeaky-clean in the investors' eyes, the deals are just not going to work."
He also cited a decline in market interest as many investors became cautious following July's sharp selloff on Wall Street.
Guess also launched its IPO at a time when U.S. retail sales have been slumping.
Analyst Howard Davidowitz called June and July retail sales "soft."
"The whole apparel segment is depressed, and all the stocks in it are depressed," he said. "That's reflecting on Guess' offering."
Still, many clothing firms tried to cash in on Wall Street this year.
Donna Karan, Calvin Klein, and Mossimo all had successful IPOs in recent months.
But on average, those shares are currently down 22 percent from their highs.
Many analysts predict Guess stock will join its high-profile competitors and slide lower in coming weeks.
|
|
|
|
Guess
Donna Karan
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
|
|