sunny.png
Wednesday March 20th, 2019 1:45PM

Strong economy does little to lift department store sales

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — It was supposed to be a great holiday shopping season. Many investors had expected department stores to enjoy robust sales in light of a U.S. economy buoyed by low unemployment, higher wages, strong consumer confidence and cheap gas.

So when Macy's and Kohl's reported lackluster numbers on Thursday, they were taken aback, sending retail stocks into a tailspin and calling into question whether such mall-based chains can compete in a changing landscape where shoppers are shifting more of their spending online.

Macy's saw only a slight increase of 1.1 percent in sales during November-December at stores opened at least year. And while sales were strong during Black Friday and Cyber Monday, the company said sales fell off noticeably until the week of Christmas.

Meanwhile, Kohl's reported a small sales growth that showed a dramatic slowdown from a year ago. Comparable sales rose 1.2 percent, versus 6.9 percent in the previous year.

Shares of Macy's plummeted nearly 18 percent Thursday, suffering its worst one-day decline. Kohl's stock closed down nearly 5 percent. Even Target's stock took a hit, falling nearly 3 percent despite showing strong holiday sales.

Earlier this week, J.C. Penney, one of the stragglers in the department store sector, reported a drop in comparable store sales of 3.5 percent for November and December. But because Macy's is considered a barometer of spending, particularly for the middle class and for mall spending, investors may be looking for deeper meaning in its performance.

"Macy's report spooked investors because investors expected it to be a great holiday season across the board," said Neil Saunders, managing director at GlobalData Retail, a retail research firm. "Now, they're questioning how good the holiday season was. There is a lot of uncertainty out there."

Adding to the uncertainty is that investors will not be getting December's monthly retail sales data next week from the Commerce Department if the government shutdown is still in effect, as most observers expect. Saunders said investors are also worried that a recovery among traditional stores like Macy's is losing momentum, raising concerns that they might have to ramp up investments even more to increase sales.

Analysts say factors like a shift to online spending and consumer preferences for so-called experiences like spas and restaurants have hurt impulse spending that likely put a dent in December's figures for Macy's and Kohl's.

Online sellers are relentlessly growing their share of retail sales. In November, e-commerce and catalog sales jumped 10.8 percent from a year earlier, according to Commerce Department data, more than double the overall sales increase of 4.2 percent. Department store sales slipped 0.2 percent during the same period.

And Marshal Cohen, chief industry adviser at NPD Group, estimates that as much as 40 percent of shoppers bought experiences as gifts this holiday season, up from 25 percent just a few years ago.

Analysts also point to factors that hit Macy's in particular. Some believe, for instance, the company may not have done enough to make its merchandise and marketing compelling for customers as it tried to compete against online players like Amazon.

Target, on the other hand, bucked the trend by posting strong online growth in November and December. Sales for merchandise ordered online and picked up at stores surged 60 percent. That is key to Target's campaign to hold online retailers like Amazon at bay, particularly during the competitive holiday season, because shoppers can dodge shipping fees.

Target Corp. said Thursday that sales at stores open at least a year increased 5.7 percent in the period, up from 3.4 percent a year earlier. Comparable online sales climbed 29 percent.

The company still expects full-year adjusted earnings in a range of $5.30 to $5.50 per share. Analysts polled by FactSet foresee $5.39 per share. The maintained outlook may have disappointed investors.

Macy's on Thursday lowered its fiscal 2018 earnings outlook to $3.95 to $4 per share from its prior per-share earnings for $4.10 to $4.30 per share. That's well below the per-share projections of $4.23 from industry analysts.

___

AP Economics Writer Chris Rugaber contributed to this report in Washington.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Corporate News, AP Business - Economy, AP Business - Personal Finance
© Copyright 2019 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Cohen, ex-Trump lawyer, to testify publicly before Congress
President Donald Trump's former lawyer, Michael Cohen, will testify publicly before Congress next month before the House Oversight and Reform Committee
5:31PM ( 14 minutes ago )
Backstage drama accompanies Romania's debut in EU presidency
Romania's government is carrying backstage drama as it makes a debut in a new role at the European Union
5:23PM ( 23 minutes ago )
Sen. Gillibrand eyes Troy, New York, for 2020 campaign base
Democratic Sen. Kirsten Gillibrand eyes Troy, New York, for 2020 campaign base
5:17PM ( 29 minutes ago )
Associated Press (AP)
The Latest: House passes 2 more bills to fund agencies
The Democratic-controlled House has passed two more bills to fund government agencies as a part of a strategy to end the partial government shutdown
4:56PM ( 50 minutes ago )
Industrials lead US stocks higher again; Macy's nosedives
U.S. stocks finish higher for the fifth day in a row in uneven trading; Macy's nosedives
4:47PM ( 58 minutes ago )
The Latest: Trump pushes for wall on Rio Grande visit
Standing along the Rio Grande, President Donald Trump says "a lot of the crime in our country is caused by what's coming through here."
4:20PM ( 1 hour ago )
AP Business
Doctors: Pelvic mesh lawsuits by 4 states are ill-advised
Doctors who specialize in female pelvic medicine are criticizing lawsuits by four states, including Washington and California, over products used to treat pelvic floor disorders
3:21PM ( 2 hours ago )
Activists want details on inquiry into ex-nuke weapons plant
Activists are asking a judge to make documents public from a 27-year-old criminal investigation into a former nuclear weapons plant outside Denver
3:07PM ( 2 hours ago )
No stethoscope for pain: Scientists seek real way to measure
Forget simply rating pain from 1 to 10: Scientists are seeking ways to finally take a real measure of the ache, so they can better treat it
1:49PM ( 3 hours ago )
AP Business - Corporate News
Stocks edge higher as industrials climb; Macy's nosedives
US stocks are mostly rising in uneven trading after a four-day rally; Macy's nosedives
3:24PM ( 2 hours ago )
Trump cancels trip to Switzerland over government shutdown
President Donald Trump says he's canceling his trip later this month to a global forum in Switzerland because of the partial government shutdown
2:48PM ( 2 hours ago )
Venezuela's Maduro celebrates 2nd term as crisis deepens
President Nicolas Maduro has been sworn in for a second, six-year term amid widespread international repudiation that his increasingly authoritarian rule has stripped Venezuela of its last vestiges of democracy
2:39PM ( 3 hours ago )
AP Business - Economy
US average mortgage rates fall; 30-year at 4.45 percent
U.S. long-term mortgage rates continued to fall this week, reaching their lowest levels in nine months
12:19PM ( 5 hours ago )
Au pairs win $65.5 million settlement in Denver lawsuit
Young people from around the world who have provided low cost child care for American families will share in a proposed $65.5 million class action settlement with the companies that bring the workers to the United States
6:49PM ( 22 hours ago )
APNewsBreak: Au pairs win $65.5 million deal in Denver suit
Young people from around the world who have provided low cost child care for American families will share in a proposed $65.5 million class action settlement with the companies that bring the workers to the United States
5:07PM ( 1 day ago )
AP Business - Personal Finance
Cohen, ex-Trump lawyer, to testify publicly before Congress
President Donald Trump's former lawyer, Michael Cohen, will testify publicly before Congress next month before the House Oversight and Reform Committee
5:31PM ( 14 minutes ago )
Backstage drama accompanies Romania's debut in EU presidency
Romania's government is carrying backstage drama as it makes a debut in a new role at the European Union
5:23PM ( 23 minutes ago )
Sen. Gillibrand eyes Troy, New York, for 2020 campaign base
Democratic Sen. Kirsten Gillibrand eyes Troy, New York, for 2020 campaign base
5:17PM ( 29 minutes ago )
April exam found no signs of pregnancy in comatose woman
Court documents show an Arizona woman in a vegetative state who was sexually assaulted and had a baby received a medical exam nearly nine months before giving birth
5:16PM ( 30 minutes ago )
Fiat Chrysler recalls 1.6M vehicles to fix Takata air bags
Fiat Chrysler is recalling more than 1.6 million vehicles worldwide to replace Takata front passenger air bag inflators that can be dangerous
5:15PM ( 30 minutes ago )