Macy’s stock tanks amid department store woes
Shares of Nordstrom, Kohl’s, Dilliard’s, and J.C. Penney tanked on Wednesday after Macy’s lowered its profit outlook in an earnings miss that was indicative of challenges within the broader department store and retail sector, reports CNBC. (https://www.cnbc.com/2019/08/14/department-store-stocks-fall-on-the-heels-of-macys-dismal-earnings.html)
Macy’s stock sank more than 17 per cent, while Nordstrom and Kohl’s fell more than nine per cent after the news. Shares of Dilliard’s and J.C. Penney sank more than five per cent. Macy’s and Nordstrom both hit new 52-week lows on Wednesday morning.
In its earnings report, Macy’s said excess inventory during the spring season forced the company to cut prices in order to move merchandise, which weighed on profits. The company is now expecting toearn between $2.85 and $3.05 a share this fiscal year, down from a range of $3.05 to $3.25.
The industry as a whole has been under pressure, as annual sales at U.S department stores fell 20 per cent from 2017 to 2018 and are on pace to drop even further this year, according to the U.S. Census Bureau.
More and more shoppers are steering clear of shopping malls and instead turning to online clothing platforms.
“Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women’s sportswear private brands, slow sell-through of warm weather apparel and the accelerated decline in international tourism,” CEO Jeff Gennette said in prepared remarks.
In an interview with CNBC Wednesday morning, Jennette said customers have no appetite for price increases that could result from new tariffs on a wide range of consumer goods made in China. A 10-per-cent tariff was set to go into effect on Sept. 1 on clothing, apparel and other items, but the tax on some items has now been delayed until Dec. 15.