Tags: retail | department store | Eddie Perkin | Eaton Vance

Eaton Vance: Department-Store Stocks Are Headed to Zero

By    |   Thursday, 06 July 2017 01:35 PM

Stocks in department stores like Sears and J.C. Penney “are heading to zero eventually,” said Eddie Perkin, chief equity investment officer at Eaton Vance.

"You have to be careful with the department stores. They're struggling, and they'll continue to struggle under the threat of Amazon and just general softness in retail," Perkin said on CNBC. "The challenge is they have debt. They have a lot of assets that are losing money."

Between 9,000 and 10,000 stores will close in the U.S. this year, said Garrick Brown, vice president of Americas retail research for commercial broker Cushman & Wakefield — more than twice as many as the 4,000 last year. He sees this figure rising to about 13,000 next year, according to Bloomberg News.

The closings include department stores that have acted as anchor tenants to major shopping malls across the U.S. Nordstrom announced on Friday the closure a full-line store in a Washington, D.C., suburb. J.C. Penney and Macy's have been closing dozens of locations across the country.

U.S. retail sales recorded their biggest drop in more than a year in May amid declining purchases of motor vehicles and discretionary spending. The Commerce Department said on Wednesday retail sales fell 0.3 percent last month after an unrevised 0.4 percent increase in April. May's decline was the largest since January 2016 and confounded economists' expectation for a 0.1 percent gain.

Other analysts are upbeat about the future of department stores, CNBC reported. Five retail analysts have a buy or overweight rating on Macy's stock, three are positive on Penney and four are bullish on Nordstrom, according to FactSet data.

A key way for stores to differentiate themselves from Amazon in terms of price, convenience and selection is to provide a unique experience, Eaton Vance’s Perkin said.

"If you can find companies where either going to the store is an interesting experience, where you need advice or you need the product quickly, those are the areas of retail which are relatively immune from the threat from Amazon," Perkin said.

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Stocks in department stores like Sears and J.C. Penney "are heading to zero eventually," said Eddie Perkin, chief equity investment officer at Eaton Vance."You have to be careful with the department stores. They're struggling, and they'll continue to struggle under the...
retail, department store, Eddie Perkin, Eaton Vance
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2017-35-06
Thursday, 06 July 2017 01:35 PM
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