DISAPPOINTING RESULTS FOR U.S. RETAILERS
Stocks tumble as investors grow increasingly more pessimistic on industry
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