US retail continues taking it on the chin. While some of it can be explained by the “Amazon effect,” I’ve long felt part of the problem was that the US consumer never fully recovered from the 2008 crisis, in spite of what the papers may claim:
A strong U.S. consumer wasn’t enough for department stores to counteract broader challenges facing the industry and investors’ high expectations for the holidays.
Shares of the country’s biggest department stores tumbled Thursday, led by disappointing holiday results delivered by the biggest department store in the U.S. by market cap, Macy’s.
Macy’s said holiday sales disappointed in sportswear, sleepwear, jewelry and cosmetics, and it now expects no growth in net sales for fiscal 2018, instead of its previous projection of an increase of 0.3 to 0.7 percent. The news pushed Macy’s stock down enough to mark its worst day ever, closing the day down nearly 18 percent.
Kohl’s on Thursday said holiday sales rose 1.2 percent over the previous year, a steep decline compared with growth of nearly 7 percent during the same time a year before. Shares of the Wisconsin-based department store fell by about 5 percent.
The bar for department stores was high this year, despite the broader decline the industry has been facing. Shoppers are headed to the mall less frequently and opting to buy directly from brands like Lululemon, rather than in stores. Those pressures have driven down the percentage of retail purchases that occur in North American stores from 14.5 percent of all retail purchases in 1985 to 4.3 percent, according to Neil Saunders, managing director of GlobalData Retail.