The Retail Industry Is at Its Breaking Point
The Retail Industry Is at Its Breaking Point By Justin Spittler – Casey Research
The bloodbath began last Thursday morning…
By the end of the day, Macy’s (M) closed down 17%. Sears fell 10%. Nordstrom fell 8%. Kohl’s fell 8%. J.C. Penney fell 7%.
Macy’s sparked the selloff by sharing dreadful financial results.
The iconic retailer’s profits fell 39% in the first quarter. Its same-store sales slid 4.6%.
Same-store sales measures the change in annual sales at stores that have been open for at least one year. It’s one of the best ways to track the health of retail companies.
Macy’s also announced plans to shut down 100 stores. That’s 15% of the company’s total store count.
Macy’s CEO Jeff Gennette didn’t rule out additional store closures either, adding, “I’m not going to say that we’re not going to close more stores.”
• The bleeding spilled over into Friday…
That morning, J.C. Penney shared its own horrendous financial results.
Its same-store sales declined 3.5% during the first quarter. That’s far worse than the 0.7% decline Wall Street expected.
J.C. Penney’s stock plunged 14% on the news. The iconic retailer is now down 45% since the start of the year. It’s trading at its lowest price ever.
And just like the day before, panic quickly spread across Wall Street.
Nordstrom closed Friday down 11%. Sears fell 7%. Macy’s fell 3%. Kohl’s fell 2%.
These are huge losses. But you would have been spared had you been reading the Dispatch.
• After all, I’ve been warning about a retail apocalypse for months…
On March 10, I said the retail industry was “close to its tipping point.”
Two weeks later, I said, “the retail apocalypse has only just begun.” I predicted that Sears’ stock would crash and eventually “trigger a violent chain reaction in the retail sector…one that could put countless other retailers out of business.”
And that’s exactly what’s happened.