Macy's weak holiday season sales send stocks plunging
Stocks of major retailers dipped ahead of market open Thursday morning, Jan. 10, on the heels of their 2018 holiday season sales reports.
Macy's shares were down more than 18 percent after the company slimmed its earnings outlook for 2019. In November and December, sales at stores operating for at least a year - including online sales - climbed 1.1 percent.
The holiday season started off on a strong note for the retailer, particularly during Black Friday and through the rest of Cyber Week, Macy's chairman and chief executive Jeff Gennette said in a statement. But that momentum fell off in mid-December "and did not return to expected patterns until the week of Christmas," Gennette said.
While Macy's saw strong sales in fine jewelry, women's shoes, dresses and outerwear, for example, that growth was offset by underperformance in other categories, such as women's sportswear, cosmetics and seasonal sleepwear.
Kohl's stock was down more than 9 percent Thursday after the company said sales at stores and websites open for at least a year, on a shifted basis, rose 1.2 percent in November and December. The previous holiday season, the company reported nearly 7 percent growth.
Kohl's chief executive Michelle Gass said customers embraced the company's investments across multiple digital shopping platforms, which prompted double-digit digital growth. "We are delighted with our 1.2 percent shifted comparable sales increase for the Holiday period, which builds on the positive momentum we have achieved throughout the year," Gass said.
For its part, Target said comparable sales grew 5.7 percent in November and December, though its share price was down nearly 4 percent in premarket trading. This year's growth was largely driven by traffic, the company said, combined with a small uptick in the average ticket price. The retailer saw the strongest growth in sales of toys and baby and seasonal gifts.
Target also reported strong results from its store pickup and drive-up options, which grew more than 60 percent from one year ago, the company said. The service accounted for a quarter of the company's digital sales in November and December.
Thursday's retail results were a "mixed bag" that showed consumers came out in force over the holidays but were choosy in where they actually shopped, said Neil Saunders, managing director of research firm GlobalData Retail. Target in particular "pulled out all the stops to create a compelling and engaging holiday experience," Saunders said, and saw that investment pay off.
Ahead of the holidays, Target announced free two-day shipping, with no minimum purchase or membership required, from Nov. 1 to Dec. 22. The company also pledged same-day delivery in 46 states with Shipt. The company also expanded drive-up services to nearly 1,000 stores by the end of October.
"This is further evidence that the rising tide of the economy is not floating all retail boats," Saunders said. "It is only helping those retailers who put effort into making their vessels seaworthy."
This article was written by Rachel Siegel, a reporter for The Washington Post.