Strong Holiday Season Wasn't Enough to Buoy Some Retailers
January 05 2017 - 5:20PM
Dow Jones News
By Imani Moise
Holiday shoppers generated a strong sales season for U.S.
retailers, analysts estimate, with consumers opening their wallets
amid higher wages, lower gas prices and rising employment. Yet
retail stocks tumbled Thursday following a string of disappointing
sales reports and news that Macy's and Sears will close hundreds of
stores. What's going on?
Q: I heard holiday sales were strong. So why are all these
retailers closing stores?
Department stores have been facing headwinds for years as they
struggle with dwindling foot traffic at stores; many have resorted
to margin-eating promotions to get customers through the doors.
Although foot traffic got a boost just before Christmas from
last-minute holiday shoppers, the one-week surge wasn't enough to
offset declines plaguing the industry.
Q: If retailers did poorly, but forecasts were strong, were the
numbers wrong?
No. Mastercard SpendingPulse estimates that overall retail sales
over the holiday season rose, as forecast, by 4%. But e-commerce
accounted for most of the growth, jumping 19% from last year --
meaning overall in-store sales were essentially flat.
"You can't make money on flat sales," said Richard Baum, a
managing partner at Consumer Growth Partners. "Whether you're a
department store or specialty store, you just can't do it."
Q: Who were the biggest losers?
Macy's Inc. and Kohl's Corp. on Wednesday both reported
disappointing holiday sales figures, and cut their earnings
forecasts for the current fiscal year. Barnes & Noble Inc., L
Brands Inc. and Sears Holdings Inc. followed Thursday with their
own disappointing news, sending a number of retail stocks down
during the day's trading.
Consumer Growth Partners' Mr. Baum noted that most of those
companies are department stores focusing on apparel. "We know that
the apparel and accessory business has been weak most of the year,"
he said, adding that these segments likely lost market share this
holiday season to categories such as electronics.
Q: What About Amazon?
Amazon.com Inc. has't reported holiday sales yet, but the
e-commerce giant has bucked most trends facing retailers. The
company said Wednesday that shipments delivered by its Fulfillment
By Amazon service grew 50% over the holiday season, delivering a
record two billion items world-wide. After Black Friday, Amazon
also reported having its "best-ever" shopping weekend for
devices.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
January 05, 2017 17:05 ET (22:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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