DIS­AP­POINT­ING RE­SULTS FOR U.S. RE­TAIL­ERS

Stocks tum­ble as in­vestors grow in­creas­ingly more pes­simistic on in­dus­try

New Straits Times - - Business / World -

NEW YORK

AS AMER­I­CANS aban­don de­part­ment stores, sales at Macy’s Inc and Kohl’s Corp are fall­ing even faster than Wall Street ex­pected.

Dis­ap­point­ing re­sults from the two chains sent a broader swath of stocks tum­bling on Thurs­day, with in­vestors grow­ing more pes­simistic on the in­dus­try.

Macy’s suf­fered its worst in­tra­day de­cline in more than eight years, and Kohl’s, JC Pen­ney Co, Nord­strom Inc and Dil­lard’s Inc all fell more than six per cent.

Macy’s posted a 4.6 per cent de­cline in com­pa­ra­ble sales last quar­ter. An­a­lysts had es­ti­mated a 3.5 per cent drop. Earn­ings also came in well below pro­jec­tions, sug­gest­ing that cost-cut­ting ef­forts aren’t mov­ing fast enough to off­set the shrink­ing sales.

The bleak pic­ture left an­a­lysts scram­bling to re­assess the com­pany and its chal­lenges.

“We now be­lieve that our es­ti­mates did not ac­cu­rately re­flect the speed at which mar­ket-share losses would oc­cur,” said Brid­get Weishaar, an an­a­lyst at Morn­ingstar Inc.

“Given first-quar­ter re­sults, we think man­age­ment will have a dif­fi­cult time hit­ting its in­ter­nal ex­pec­ta­tions for this year.”

New chief ex­ec­u­tive of­fi­cer Jeff Gen­nette aims to nurse Macy’s back to health by slash­ing expenses, shut­ter­ing stores and elim­i­nat­ing jobs. The re­tailer also is in­vest­ing in e-com­merce and its off-price brand, Back­stage.

Macy’s shares fell as much as 17 per cent to US$24.50 (RM106.45) here, the big­gest in­tra­day de­cline since the fi­nan­cial cri­sis in Oc­to­ber 2008.

Kohl’s re­ported sim­i­larly bleak sales in the first quar­ter. But its earn­ings were bet­ter than an­a­lysts pro­jected.

Like Kohl’s, Dil­lard’s beat earn­ings es­ti­mates on Thurs­day. But its com­pa­ra­ble sales fell four per cent in the first quar­ter. Bloomberg

BLOOMBERG PIC

Macy’s new chief ex­ec­u­tive of­fi­cer Jeff Gen­nette aims to nurse the com­pany back to health by slash­ing expenses, shut­ter­ing stores and elim­i­nat­ing jobs.

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