Thousand shares of Saks buy gown tonight

Bloomberg

At Ruth’s Chris Steak House in Manhattan, where a Cowboy Ribeye costs $47, the price of a share in the restaurant chain would cover the 80-cent sales tax on a side order of potatoes au gratin.

A visitor to a Citigroup branch in New York could either pay $3 to withdraw cash from an automated teller machine or buy three shares of what once was the world’s biggest bank by market value. A General Electric share, whose price has plunged 80 percent in the past 12 months, would purchase a 26- watt EnergySmart light bulb that’s not supposed to burn out for five years.

After the Dow Jones Industrial Average fell to the lowest since 1996 and Citigroup dropped below $1 for the first time, investors may find that buying equity in global brand names is cheaper than their products -- although not always a better buy.

"If you put X amount of money into Citi at 99 cents a share, you may end up eventually with zero," said Brian Sozzi, an analyst at Wall Street Strategies in New York. "Go to Dollar Tree and put down that 99 cents and you might get a can of soup. You’ll have something to eat and a lot fewer headaches."

The Chesapeake, Virginia-based discount retailer’s shares have risen 41 percent over 12 months as the recession has deepened, compared with a 48 percent decline for the Standard & Poor’s Midcap 400 Index.

Even after the Standard & Poor’s 500 Index fell 49 percent in the past year, stocks may continue to decline, according to Sozzi.

"You trust what the market is trying to tell you," he said. "You can’t believe what’s on these balance sheets."

The S&P may fall another 40 percent, based on a price-to-earnings ratio of less than 7 during the trough of the 1981-1982 recession, said Patty Edwards, founder of analytical firm Storehouse Partners in Washington. The S&P was valued at a 10.16 ratio Thursday, according to data compiled by Bloomberg. The index fell to the lowest in 13 years Thursday, closing at 682.55.

"Is the problem that stock prices are too low or prices on consumer goods are too high?" Edwards said in an interview. "I’d love to tell you that this is overdone. The problem is I don’t believe that."



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At Thursday’s closing price of $1.86, it would take about four shares of General Motors to buy a $7.99 Bosch Iridium-Fusion spark plug for a four-cylinder Chevrolet Cobalt, according to AutoZone Inc.’s Web site.

A Sunday edition of the New York Times sells on city newsstands for $4, eight cents less than the cost of one of the publisher’s shares. Ruth’s Hospitality Group, the Heathrow, Florida-based owner of Ruth’s Chris restaurants, dropped to 86 cents on the Nasdaq Stock Market Thursday, the lowest since the chain was taken public in 2005.

A share of Tiffany & Co. also doesn’t go very far. The world’s second-largest luxury jeweler has dropped 56 percent in 12 months after consumer spending fell in last year’s third and fourth quarters.

At $17.13, the closing price in New York Thursday, two shares will cover the $32.51 price, including sales tax, for hand-engraving initials on a $115 sterling-silver money clip, according to the store’s Web site.

"A share of The Limited wouldn’t buy a pair of panties at Victoria’s Secret," Edwards said. "It would take a thousand shares of Saks to buy an evening gown."

Limited Brands, owner of lingerie retailer Victoria’s Secret, closed at $6.40 Thursday while a pair of its Sexy Little Thing panties costs $10 when bought in a package of three, according to the Web site.

Saks, the U.S. chain partially owned by Mexican billionaire Carlos Slim, features a $2,490 organza-trim dress by designer Carolina Herrera on its site. The shares fell 6 percent to $1.99 in New York Thursday.

The U.S. unemployment rate may rise to 10 percent this year, further choking off consumer spending, Edwards said. One share of Starbucks, which lost 53 percent of its value in the past year and closed at $8.56 Thursday, won’t even pay for a one-pound bag of Breakfast Blend coffee selling for $9.95 at the Seattle-based company’s online store.

"The consumer has bought so many lattes," Edwards said. "Now they will spend the next five years paying off the last five years of consumption."