Department stores and specialty chains are suffering from falling foot traffic, slow sales and mountains of inventory as American consumers increasingly spend less on clothing—and as bleak first quarter results rolled in this week, retail stocks took a beating.
Macy’s (M) slumped as much as 15 percent Wednesday—its worst decline in six months—after the retailer revealed first-quarter sales fell 7.4% to $5.77 billion and it cut its profit forecast for the year to between $3.15 and $3.40.
Gap Inc. (GPS) was downgraded to junk status by Fitch Ratings, following the company’s fifth straight quarter of shrinking sales due to weakness across its Gap, Banana Republic and Old Navy brands. The company said first-quarter earnings are expected to be in the range of $0.31 to $0.32 and its stock promptly dropped to its lowest level since late 2011.
Kohl’s (KSS) profit plummeted by 87 percent from $127 million to $17 million, or $0.09 per diluted share, in the three months ended April 30. Kevin Mansell, Kohl’s chairman, chief executive officer and president, called the quarter “challenging.” The retailer’s stock was down 9.25% to $35.12 per share when the market closed Thursday.
Nordstrom (JWN) released first-quarter earnings below expectations at 4:05 p.m. EDT Thursday—which the department store operator attributed to lower than planned sales and higher markdowns—and its shares were down by more than 13 percent within five minutes of the news. Net earnings reached $46 million, or $0.26 per diluted share, compared with $128 million a year ago, or $0.66 per diluted share. And with promotions expected to continue for the foreseeable future, Nordstrom cut its earnings per diluted share outlook to be in the range of $2.50 to $2.70, versus prior guidance of between $3.10 and $3.34.