A strong U.S. consumer wasn’t enough for department stores to counteract broader challenges facing the industry and investors’ high expectations for the holiday season.
Shares of the country’s biggest department stores tumbled on Thursday, led by disappointing holiday results delivered by Macy’s.
Macy’s said holiday sales disappointed in women’s sportswear, seasonal sleepwear, fashion jewelry, fashion watches 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 put Macy’s stock on track for its worst day ever, falling by about 19 percent in morning trading.
“In the holiday period, we saw strong performance across a number of categories (fine jewelry, women’s shoes, fragrance, dresses, outerwear, active and home),” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “This sales growth was largely offset by: underperformance of other categories; temporary fulfillment challenges following the fire in our West Virginia distribution center; and underestimation of the impact of changes to our pre-Christmas earn and redeem promotional event.”
“We are revising the guidance we provided in November and will continue to take the necessary steps in January to ensure a clean inventory position as we enter fiscal 2019,” Gennette continued. “Looking back at 2018, we met our goal of returning the company to growth. Our revised guidance is above the expectations we set at the start of the fiscal year, and we expect to deliver our fifth consecutive quarter of positive comparable sales, including ‘comping the comp’ of the 2017 holiday season. The North Star Strategy is gaining traction, and the entire organization is engaged and motivated to continue improving our performance in 2019.”
Meanwhile, 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 8 percent.
Target fared better, however, with holiday sales growth of 5.7 percent that topped its 3.4 percent growth in the prior year. But it kept its fiscal 2018 outlook constant, potentially a disappointment. Its shares fell by about 4 percent.