According to some panicky commentators, the weak results last week from a group of big US department store chains such as Macy’s JC Penny, Nordstrom and Kohl’s reflect problem in the US economy.
Well, then what are we to make of the sharp, 1.3% surge in retail sales last month across the US (0.9% when cars, petrol and associated products are stripped out)? The rise was a sharp rebound from the surprise 0.3% fall in headline sales in March,
The strong monthly report (after a couple of weak months) made a mockery of the doom and gloom forecasters.
But there will be more of the instant expert approach to retailing this week with 12 of the 21 S&P 500 companies due to report earnings this week being retailers – including the two largest Walmart Stores and Target.
On top of that the two leading players in the home improvement sector – Home Depot and Lowes Cos. (Woolies partner in the Masters misadventure) are due to report, along with the most successful group in any sector – The TJX Companies, which includes the TX Maxx “off price” apparel and homewares chain).
Other to report this week include bankrupt Aeropostale, Gap (which had its credit rating cut to junk last week), TJX Companies, Walmart, Target, Home Depot, Lowes, LBrands, American Eagle, Staples (whose merger with Office Depot was abandoned last week), Dollar Tree (a ‘dollar’ shop chain), The Bon Ton Stores, Williams Sonoma (homewares), and Foot Locker.
Last week’s sell off didn’t spare anyone – Walmart shares fell nearly 3% on Friday and over 5% for the five days of trading. TJX shares lost 2% on Friday and 5% for the week.
Seeing the sell off in retailing last week was driven by weak apparel sales at the department store chains led by Macy’s, the quarterly report from TJX and Target (another big apparel group) will go a long way to either settling nerves (if the sales are solid) or sparking another sell off.
Despite the solid retail sales report forApril, consumer-discretionary stocks, which mainly include retailers, fell 0.6% on Wall Street on Friday night, and were the week’s biggest losers with a drop of nearly 1%.
JC Penny joined its peers on Friday in reporting weak quarterly sales which missed forecasts. The shares closed down 2.8% after same store sales eased 0.4% in the quarter against forecasts for a rise of 4.2%.
Nordstrom shares plunged 13% on Friday after the department store giant shocked with a very weak quarterly report on Thursday night after trading had ended. Same store sales fell 1.7% in the quarter and the company cut its sales and profit outlook for the full year. On Thursday Dillard’s reported a steep drop in first-quarter earnings, pulled lower by weaker sales as consumers spend less at traditional stores. In fact same store sales fell 5% in the quarter and the company singled out homewares, furniture and women’s clothing.
Shares in the company declined 3.7% in after hours trading. Through Thursday’s close, the stock had lost more than half its value. On Wednesday Macy’s — America’s biggest department-store chain — sparked a selloff across its rivals, apparel makers, mall owners, luxury brands and rival chains in reporting worse-than-expected sales slide and was joined later by smaller rival Kohl’s and then Dillard’s.
Higher-end rival Nordstrom Inc. on Thursday also slashed it outlook for the year after it logged disappointing first-quarter results. Americans’ shift to online shopping and fast-fashion chains like H&M Hennes & Mauritz AB has pressured more traditional retailers, forcing many to shutter stores, lay off workers and, in cases like Aerospostale Inc., to go bankrupt.
Same store sales at Macy’s — excluding locations that were opened or closed over the past year—fell 5.6% in the three months to the end of April, the fifth straight quarterly decline and its worst three-month performance since the second quarter of 2009.
Kohl’s saw a shock 87% slump in quarterly earnings at same store sales fell 3.9%, instead of an expected rise of 0.7%. Sales fell 3.7% to $US3.97 billion.
Ralph Lauren saw a 6% slide in same store sales in the latest quarter, and profit fell more than 60%, as the stronger US dollar hit its overseas sales and other income.
And yet sales at discount and fast fashion groups such as TJ Maxx and H&M are growing strongly and these groups are the best performing part of retailing in America at the moment.
