Filed Under: ,
Tickers in this Article: DDR, PLD, LIZ, AWC, AA
Our weekly round up of the worst performing stocks last week includes a couple of over-leveraged real estate investment trusts, a well-known apparel company, and a small basic materials company.

REITs Make the List Again
(NYSE:PLD) declined 49% last week closing on Friday, Nov. 14 at $5.08. The company is an industrial REIT that owns nearly 3,000 properties worldwide, and the stock declined due to general anxiety over REITs that have exposure to economically sensitive sectors and the company's access to capital and debt exposure.

The company is trying to work its way through the difficult times, and announced a plan to manage through it. On Wednesday, November 12, Chainman and CEO Jeffrey Schwartz resigned. The company also cut its dividend for 2009 to $1.00 from the previous announced amount of $2.28, and the $2.07 paid in 2008. The dividend cut will save ProLogis $290 million annually. Also, in an effort to save on costs, ProLogis wants to cut selling, general and administrative expenses by up to 25%.

There were no new developments at Developers Diversified Realty (NYSE:DDR) during the week. The REIT is a major owner of shopping centers across the U.S. and also in Russia and Canada. The stock sold off 46% last week due to investor concern about REITs and DDR's heavy leverage to the consumer going into a recession. Monday saw a rebound of 4% to close at $5.43. Developers Diversified cut its outlook and reduced its dividend in late October and announced asset sales to raise capital. The company has $1.7 billion in debt maturing in the next two years.

Demand Shock for Liz Claiborne
Clothing company Liz Claiborne (NYSE:LIZ) markets several brands to retailers worldwide. The company reported its fiscal third quarter earnings early in the week, and although it beat estimates, Liz Claiborne trimmed its outlook for the full year to reflect deteriorating market conditions. "On top of what I would call a real softness in September during back-to-school, the consumer was hit hard by the gripping financial moods in early October and quickly retreated," CEO William McComb said during the conference call. "The response was an immediate demand shock, a clear and instant reaction to the banking crisis and the uncertainty coming from Washington. We're seeing it around the United States and in most of the key markets."

The company is taking several actions to deal with the slowing economy including cutting capital expenditures in 2009 by 50% and controlling the level of inventories. The stock ended the week down 45%. It closed Monday's session at $3.65 a share, a 21-year low on the stock.

Alumina drops 45%
Australia's Alumina Ltd. (NYSE:AWC) owns 40% of a private company called Alcoa World Alumina and Chemicals (AWAC). Alcoa (NYSE:AA), itself, owns the other 60% of AWAC. AWAC is a leading producer of the raw material alumina, which is used in the smelting process for aluminum. Alumina's stock declined 45% last week, and a further 0.88% on Monday to close at $3.39. On Monday, CEO John Bevan said there was a lowering of anticipated funds required for expansion in its Suriname refinery, but the market seemed concerned about the decline in economic activity worldwide, and its effects on the company's business. Alcoa did announce a production cutback last week of 350,000 metric tons per year. This is in addition to the 265,000 metric ton cutback in October 2008.

Bottom Line
The week's worst stocks were impacted by general investor concern over debt, and exposure to the consumer and the economy. There seems to be a cutting of expenditure and expansion as the companies weather the storm.

comments powered by Disqus

Trading Center