Tags: Retail | Woes | Department | Stores | Shoppers | Consumers

FT:  Retail Woes Deepen as Department Stores Undergo 'Reinvention'

FT:  Retail Woes Deepen as Department Stores Undergo 'Reinvention'
Dean Neitman | Dreamstime.com

By    |   Friday, 12 May 2017 07:54 AM

The retail outlook turned just a little bit gloomier this week as three chains — Macy’s, Kohl’s and Dillard’s — reported another quarter of worse-than-expected sales.

The dismal results sparked a selloff in shares of department stores and stirred fears that consumers aren't spending enough to drive strong economic growth.

Macy's dismal quarterly performance sent its shares tumbling 17 percent, taking a toll on the consumer discretionary sector, which fell 0.59 percent.

Kohl's stock dropped 7.86 percent after it reported a drop in quarterly sales, while shares of Nordstrom and J.C. Penney each dropped more than 7 percent. Dillard’s shares plunged 17.5 percent after the retailer said same-store sales fell 4 percent.

"The brick-and-mortar are getting hurt probably more than anybody would have expected," Anthony Conroy, President of Abel Noser in New York, told Reuters.

The weak corporate reports left investors looking to April retail sales data due out on Friday for signs of whether consumers are simply shifting their spending habits away from department stores, or just aren't spending.

"It's a gut check about the health of the consumer," said Phil Blancato, Chief Executive of Ladenburg Thalmann Asset Management. "It's a canary in the coalmine moment."

Retailers are facing unprecedented upheaval amid falling mall traffic, shifting consumer shopping patterns that prioritize spending on recreation, and fierce competition from online stores and off-price retailers that offer branded goods at steep discounts, The Financial Times explained.

Retailers have been closing shops and cutting jobs at a pace not seen since the Great Recession.

Macy’s has already said this year that it could cut up to 10,000 jobs and shutter 100 stores, and Jeff Gennette, its chief executive, told analysts on a conference call that the U.S. remains “over-retailed compared to other markets,” the FT reported.

“These are unusual and challenging times for retail, especially for mall-based department stores. We know that these changes we’re seeing are secular and not cyclical,” Gennette said. “But we don’t have our head in the sand as to the significant challenges that we face to get the business growing again.”

Few analysts are “expecting the road ahead to get easier soon. S&P is forecasting double-digit declines in first-quarter earnings for department store operators and big box retailers. And retail bankruptcy filings so far this year have already outpaced those recorded for the whole of 2016,” the FT reported.

Dana Telsey, analyst at Telsey Group, told the FT: “The first quarter was tough for everyone and we will see more differentiation as the year proceeds depending on the new elements they add to their offerings on product and service. The department store space is going through a reinvention.”

(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).

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The dismal results sparked a selloff in shares of department stores and stirred fears that consumers are not spending enough to drive strong economic growth.
Retail, Woes, Department, Stores, Shoppers, Consumers
Friday, 12 May 2017 07:54 AM
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