The Columbus Dispatch
CENTRAL OHIO RETAILERS FACE TURBULENT FUTURE
Low consumer confidence at play
It’s been a rough 2023 for shareholders of Big Lots, Victoria’s Secret and most other retailers based in central Ohio.
Shares of these companies have been crushed this year, dragged down by flailing sales, falling consumer confidence and fears of an economy being pushed into a recession by higher interest rates.
“Specifically, our lower income consumer has been hurt by inflation and by lower tax refunds and higher interest rates and their confidence has been shaken by banking failures,” Big Lots CEO and President Bruce Thorn said in a statement after the retailer posted a loss of $206 million, about half of which was tied to one-time expenses, for its first quarter. Sales fell 18%.
Shares of the closeout and discount retailer, which rocketed from about $13 per share at their pandemic low in March 2020 to $72 in June 2021, now can be had for $4.87 as of Thursday’s stock market close. Shares have fallen 67% this year.
As a result, Big Lots suspended its dividend and said it will sell its headquarters in Columbus and lease it back.
Victoria’s Secret shares are trading at their lowest since the company split from Bath & Body Works nearly two years ago after it released its first-quarter results on Wednesday that showed slowing sales and profit.
Shares of Columbus-based Designer Brands are down 32% this year and 58% over the past year and Express shares are off 34% so far in 2023 and 80% over the past year. Shares of Bath & Body Works are down 18% year to date.
Shares of Express, at one time, got caught up in the meme craze in 2021, jumping to $13 per share at one point.
On Thursday, they traded at 59 cents.
The one standout: Abercrombie & Fitch.
Misery loves company?
If there is any consolation for these retailers, is that they do have plenty of company.
Macy’s on Thursday slashed its outlook for the entire year with sales weakening in the first quarter during an increasingly challenging economic environment, including stubbornly high inflation. Quarterly profit and sales dropped to open the year as sales began to flag in March, forcing the New York department store to cut prices on clothes and other discretionary items.
Dollar General shares fell 18% Thursday when it too issued a weak forecast and Advanced Auto Shares fell 35% Wednesday on its forecast.
“We are seeing the classic signs of the lagged impacts of interest rate hikes on consumers,” said Nick Raich, CEO of
The Earnings Scout, an advisory firm based in Cleveland.
The haves and have nots
By all appearances, stock markets are off to a good start this year.
The benchmark Standard & Poor’s index of the 500 biggest public companies is up 10% while the NASDAQ has jumped 26%. The Dow Jones industrial average, made up to 30 large companies, is off 1%.
But the results so far this year have colored up what has been a subpar year for most companies compared to the averages. The gains have been mostly made on the backs of a handful of large tech companies such as Apple, Nvidia and Facebook parent Meta.
Raich said shares are down in 56% of companies in the S&P 500 this year and three out of four companies have lagged the return of the full index.
“This continues to be a growing market and economy of haves and havenots,” he said.
Abercrombie is the winner so far in 2023
Abercrombie & Fitch and a small number of other retailers such as Lululemon have defied the sales slide that have hit other retailer retailers.
Abercrombie said last month that its first-quarter sales increased 3% from a year ago, led by strong sales at its Abercrombie brand.
Sales of $836 million marked the highest first quarter sales level since 2014, the company said. It expects sales growth of 4% to 6% in the second quarter.
Abercrombie shares are up 28% so far in 2023 and 48% over the past year.
“What is driving that is a lot of exciting things. It’s no longer just a jeans and T-shirt business,” CEO Fran Horowitz told analysts on a conference call detailing the first quarter numbers. “We’ve been able to expand into dresses . ... Our pant business is very strong . ... We started this turn with women’s and now the men’s business is following suit. So as far as the customer behavior goes, we’re seeing them very excited about the product. “
Shares of Victoria’s Secret fall
Shares of Victoria’s Secret are off 44% year to date.
Sales in the first quarter were down 5% compared with a year ago and adjusted net income of $22 million was down from $97 million in the first quarter of 2022.
It expects adjusted profit for the second quarter of 10 cents to 40 cents per share, well below Wall Street estimates of 98 cents.
It shares dropping nearly 9% Thursday to $18.64.
“The first quarter continued to be a volatile macro environment for our customer and as the quarter progressed business became more challenging,” CEO Martin Waters said in commentary about the quarter. email@example.com @Bizmarkwilliams