Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Macy's forecast helps trigger sell-off in U.S. retailers

Stock Markets May 11, 2016 04:59PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. People hold Macy's shopping bags outside the store at the Herald Square location in New York
 
US500
-2.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ODP
-0.97%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMZN
-2.72%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SPLS
0.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TGT
-2.62%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PRU
-2.29%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Caroline Valetkevitch

NEW YORK (Reuters) - Investors heavily discounted U.S. retailers on Wednesday after a series of disappointments in the sector, including a weak forecast from Macy's Inc (N:M).

Macy's stock dropped 15.2 percent to $31.38, the lowest since December 2011, after the company posted a much bigger-than-expected drop in quarterly sales and slashed its full-year forecast.

The stock helped lead a 1.9 percent decline in the S&P 500 retail index <.SPXRT>.

The selling quickly spread in the sector as the outlook for brick-and-mortar retailers weakened. Shares of Fossil Group (O:FOSL) fell 29.1 percent, also following disappointing results and a worse-than-expected forecast.

Nordstrom Inc (N:JWN), due to report results on Thursday, was down 7 percent, while Tiffany & Co (N:TIF) fell 6 percent and Target Corp (N:TGT) shed 5.4 percent. Real estate investment trusts tied to mall properties also fell sharply, including Simon Property Group (N:SPG), whose 5 percent decline was its biggest since 2011. A regional mall index (FTFN22) fell 5 percent.

In another blow, Office Depot Inc (O:ODP) and Staples Inc (O:SPLS) shares sank after a federal judge late Tuesday granted a request to stop their planned merger because of antitrust concerns.

Brick-and-mortar retailers have suffered as consumers increasingly shop on Amazon.com (O:AMZN) and other online sellers.

"You heard one after another during the earnings season talk about the difficulties - they're cutting, they're closing stores," said Quincy Krosby, market strategist at Prudential Financial (NYSE:PRU) in Newark, New Jersey. "The fact of the matter is there have been questions about retail spending, and valuations overall in consumer discretionary were rich."

Last week, teen apparel chain Aeropostale Inc filed for bankruptcy after years of losses.

The wider consumer discretionary sector (SPLRCD) has had a strong run since 2012, scoring the best performance of any Standard & Poor's 500 segment last year. It is up just 0.9 percent so far in 2016 but is still among the most expensive ones relative to earnings.

Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said retail stores may need to build up their online businesses or find a niche in order to boost sales.

Macy's, for one, is trying to make money from its unproductive real estate.

Without new strategies from companies, shares may need to sell off more to again become attractive to investors.

Macy's, which has fallen 10.3 percent so far this year, trades at 9.7 times its forward earnings estimates, while Nordstrom, down 8.8 percent for the year, trades at 14.9 times forward earnings, Thomson Reuters data show.

By comparison, the S&P 500 (SPX) is valued at about 16.9 times the forward earnings of its components.

Macy's forecast helps trigger sell-off in U.S. retailers
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email