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Downgrades hit retailers
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November 28, 2000: 9:23 p.m. ET
Analysts' downgrades for AnnTaylor, Gap cast shadow over other names in sector
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NEW YORK (CNNfn) - Specialty retailers caught the brunt of investors' jitters Tuesday after analysts downgraded two of the biggest names in the apparel sector -- AnnTaylor and casual wear retailer Gap.
Shares of women's apparel retailer AnnTaylor (ANN: Research, Estimates) fell over 20 percent, losing $7.88 to close at $30 Tuesday on the New York Stock Exchange.
Robertson Stephens analyst Janet Kloppenburg downgraded the stock and lowered her fourth-quarter earnings estimate based on what she said could be disappointing sales in November.
Merrill Lynch cut its intermediate-term rating on Gap (GPS: Research, Estimates) to "accumulate" from "buy," saying it thinks the stock has exceeded Merrill's $27 price target.
 "While we continue to believe the Gap will enjoy earnings stabilization in the holiday season, we believe the recent appreciation in the stock price has discounted this performance," Merrill said.
Merrill Lynch, however, kept its long-term "buy" rating for Gap. Gap shares dropped 4.18 percent, falling $1.31 to $26 on the New York Stock Exchange.
The downgrades shadowed other names in the sector. May Company (MAY: Research, Estimates) closed 25 cents lower at $29.06. Intimate brands (IBI: Research, Estimates) lost $1.50 to $17.69. JC Penney (JCP: Research, Estimates) fell 25 cents to $10.06, and Limited (LTD: Research, Estimates) dropped $1.75 to $22.13 on the New York Stock Exchange.
In a research note Tuesday, Kloppenburg said she had been expecting same-store sales -- or sales at stores open at least one year -- to increase 4 percent in November, but the figure could be as low as a positive 1 to 2 percent for the month due to a highly competitive environment.
Kloppenburg lowered her rating on the shares of AnnTaylor to a "long-term attractive" from a "buy" and cut her fourth-quarter earnings estimate to 66 cents from 74 cents a share.
"The ... higher competitive marketplace has resulted in sharper pricing from direct competitors in this difficult retailing environment and may be causing (AnnTaylor) to take markdowns on holiday assortments earlier than originally planned," Kloppenburg said in a note.
 Kloppenburg said she expects fourth-quarter revenues to increase 19.5 percent to $355 million, down from her previous 23.2 percent projected rise.
Some analysts do not believe AnnTaylor was necessarily up against such stiff comparisons.
"Unless there is a big miss in November and there's something very wrong that I don't know about, I think this is a big over-reaction," said Chase H&Q analyst Harry Ikenson, who currently has AnnTaylor's stock rated as a strong buy. 
--from staff and wire reports
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