- Shares of retailers fell on Thursday after Target, Kohl’s, and Macy’s reported holiday sales guidance. Nordstrom shares plunged 8% in sympathy, and Best Buy fell 3%.
- Macy’s led the group to the downside, with an 18% drop. The company lowered its sales and earnings guidance after a weak holiday period.
- The XRT, a popular retail-tracking ETF, fell 2%.
Shares of retailers were hit hard on Thursday after a handful of stores offered holiday sales guidance that disappointed investors.
Macy’s was a notable decliner, plunging nearly 19% after lowering its sales and earnings guidance after a weak holiday period. Kohl’s fell by over 6% after its comparable sales growth was smaller than the same period last year.
Target, meanwhile, reported solid comparable sales growth, but held its full-year sales and earnings per share steady, which Deutsche Bank analysts said was likely behind the stock’s decline. Some investors hoped a strong holiday season would translate to lifting full-year guidance, analysts led by Mike Baker told clients on Thursday.
“While the sales were strong, we think that product mix and digital fulfillment could have added pressure to margins and as such, we think the implied guidance suggests the possibility that margins could be down slightly in 4Q,” the analysts wrote.
Here’s what some of the major retailers said today about how they fared during the 2018 holiday season.
- Target: Comparable sales grew 5.7% in November and December, compared with a rise of 3.4% over the same period last year. For the entire fourth quarter, Target said it still expected comparable sales growth of around 5%, and left its full-year sales and earnings per share guidance unchanged.
- Kohl’s: Comparable sales in November and December rose 1.2%, compared to a nearly 7% rise during the same period last year. The company also said it lifted its full-year guidance on diluted earnings per share.
- Macy’s: Comparable sales increased by 0.7% during the holiday season. The company lowered both its full-year sales and profit guidance after disappointing holiday sales; Macy’s now forecasts flat annual revenue growth, compared to its prior estimate of a 0.3% to 0.7% rise.
Macy’s, specifically, pointed to a holiday season that started off well, but languished.
“The holiday season began strong – particularly during Black Friday and the following Cyber Week, but weakened in the mid-December period and did not return to expected patterns until the week of Christmas,” Jeff Gennette, Macy’s chairman and CEO, said.
The retailers’ reported weakness did not look like a broader warning sign for the US consumer at this point, said Matt Maley, equity strategist at Miller Tabak, a Massachusetts-based institutional trading firm.
“From what I can see, nobody is blaming the consumer for these results,” Matt Maley told Business Insider in an email on Thursday.
He pointed specifically to strong employment and solid wage growth, so the issue he said appeared to be a more sweeping challenge faced by brick-and-mortar stores.
Bed, Bath & Beyond was one retailer bucking the trend on Thursday. Its stock rose 5%, extending a 20% surge in after-hours trading on Wednesday, after reporting quarterly earnings.