What’s News in Markets: Beauty Spots, Bright Jeans, Disney Battle
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Hey, listeners. It's Saturday, April 6th. I'm Francesca Fontana for The Wall Street Journal, and this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. All right, let's get to it. Hey, everybody. Happy April. We all know the saying, April showers bring May flowers, which certainly rings true for all the rain we've been having here in Manhattan lately. And maybe this applies to the stock market, too, because there has been a bit of a gloomy start to the month. The three major indexes ended the week lower as inflation concerns continue to loom in investors' minds. But there was a bright spot. On Friday, a strong jobs report gave some assurance to Wall Street that inflation is cooling off.
And thanks to that, all three indexes notched daily gains. Let's start off with beauty stocks, which lost some of their glamour this week. Ulta Beauty, which, along with Sephora, is one of the mainstay cosmetic retail chains, issued a disappointing outlook at an investor conference this week. The company said that a decline in consumer spending is happening faster than it expected, and it's seeing this widespread weakness across the board, not just in more expensive products or just in perfume sales, for example. It's interesting because this slowdown is coming after several years of strong growth for Ulta and other beauty chains. Even as inflation kept rising and rising, people just kept buying more makeup, perfume, skincare products, and so on.
I mean, I'm not a huge makeup person, but I do know that when remote work started to end and I was coming back into the office starting a couple years ago, I definitely made one of my rare makeup hauls, you know, since I was going to finally be seeing real people in real life again. And sure, for me, that haul was like three things. But there was some thought that this actually was helping keep beauty sales afloat, people getting back out into the world after COVID lockdowns. We're all just trying to look our best. So this pessimistic outlook weighed on Ulta pretty heavily.
What market context set the stage for this week's stock moves?
The stock fell 15% on Wednesday, making it the largest decliner in the S&P 500, and it led other beauty stocks lower, too. And unfortunately, Ulta didn't claw back much of that ground the rest of the week. A brighter spot for retail stocks this week was Levi Strauss. The Levi's jeans maker raised its annual outlook on Wednesday and said it was refocusing on direct-to-consumer sales to offset its declining wholesale business. Now, to be sure, the company also posted a quarterly loss after booking a restructuring charge, but investors seem to focus more on the positives. For one, more than 40% growth in loose-fit jeans, as fashion preferences for women and men keep trending towards baggier pants. I know millennials may lament this nail in the coffin for skinny jeans, but come on, fashion is cyclical, so they'll be back in a few years.
Just be patient. And honestly, just wear what you want. Who cares? Okay, off my soapbox. Levi's shares jumped 12% Thursday on the positive news and held on to most of those gains Friday.
Last, let's talk about Disney. Dedicated What's News listeners, you've already heard about Disney's victory in the latest proxy battle with activist investor Nelson Peltz. But while Peltz and his hedge fund, Tryon Partners, may have been defeated in the boardroom, they still ended up with a pretty hefty consolation prize—about $300 million. That's how much the fund has profited on its 16-month investment in Disney, according to people familiar with the matter.
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