Retail Sales Soar As Consumers Continue To Swipe-In The Holiday Season

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The company also reduced its full-year 2019 guidance, including a drop in comparable sales of 1.0-1.5% from flat to up 1.0%, with EPS in the range of US$2.57-US$2.77 from US$2.85-US$3.05 initially.

Gimme Credit analyst Carol Levenson recently noted that the Q3 2019 sales decline at Macy’s was its “worst performance of any department store chain,” except J.C. Penney (NYSE: JCP) and matched the worst quarterly sales decline for Macy’s since 2017.

Levenson said that “for the first time we can recall, the company did not say that its digital sales were up in the double digits. Under repeated questioning” on the company’s earnings conference call, she noted that “management said digital sales had slowed down sequentially (in part blamed on web site renovation as well as a tough comparison) but were still positive.”

By contrast, Target (NYSE: TGT) had seen its Q3 2019 sales outpace street estimates, as well as its own expectations, spurring a rise in full-year 2019 guidance. The results had triggered a rise in its stock of a little more than 14%.

Levenson added that contributing to the store’s stellar results was a “heavy penetration of less costly digital fulfillment options—mainly the stores—with a remarkable 80% of the 31% in digital sales growth coming from same-day fulfillment options such as Order Pick Up, Drive Up, and Shipt.”

While Macy’s stock has plummeted over 55% from its latest 52-week lows set in early December 2018 to US$15.44 intraday Monday, shares of Target have skyrocketed almost 104% from its one-year low set in late December 2018.

Sensational Shopping

Given the trajectory of Macy’s dismal sales performance, it could join the trend of rising retail bankruptcies and restructurings, including recent calamities such as Barney’s, Gymboree, Diesel and Payless ShoeSource.

Moreover, online retailers seem to be further fueled by the gaps left emptied by store closures such as Forever 21, Sears (OTCMKTS: SHLDQ), Kmart and Toys “R” Us.

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DISCLOSURE: AUTHOR SECURITY HOLDING: NO POSITIONS

The author does not hold any positions in the financial instruments referenced in the materials provided.

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