Shares of several major U.S. department store chains plummeted on Thursday after Macy’s M, which often acts as the sector’s barometer, reported second-quarter earnings that showed further year-over-year declines.
Other retailers reported their second-quarter results and have since seen their stock prices fall. Although Kohl’s KSS and Dillard’s DDS beat some Wall Street estimates, weak sales figures continued, which prompted investors to run in fear on Thursday morning.
Macy’s (M) reported earnings $0.48 cents per share, which beat the Zacks Consensus Estimate of $0.45 a share. The company posted revenue of $5.55 billion, beating our Zacks estimate of $5.5 billion. Still, the revenue figure marked a 5.4% decline year-over-year.
The nation's largest department store chain reported a 2.8% drop off in established store sales in the second quarter. The Cincinnati-based company now projects full-year earnings of $2.90 to $3.15 a share, and Macy’s expects sales will fall between 3.2% and 4.3%.
”I’m encouraged by the second quarter and we’re on track for the year,” Macy’s CEO Jeffrey Gennette said on a conference call. “But I also know that we operate in an environment of intense and destructive competition, and that our customer has more shopping options than ever.”
Macy’s stock was up slightly premarket. However, the initial positivity based on earnings and revenue beats has been countered with extreme pessimism in the once-powerful retail giant. Shares of Macy’s fell 9.18% in morning trading to reach a new 52-week intraday trading low of $20.85 per share.
Kohl’s (KSS) reported earnings of $1.24 per share, beating the Zacks Consensus Estimate of $1.19 and up 49% from the year-ago period. The company posted revenues of $4.14 billion, which just beat our Zacks estimate. Kohl’s revenues fell by 0.9% year-over-year.
The department store chain’s comparable store sales were down 0.4%, which is up from the 2.7% decline the company experienced in the first quarter.
”The improvement in our sales trend was driven entirely by an improvement in traffic,” Kohl’s CEO Kevin Mansell said on a conference call.
Still, despite some signs of improvement, shares of Kohl’s fell 6.42% on Thursday. The stock has already traded hands over 12 million times, well above its 4.6 million average volume.
Dillard’s (DDS) reported a quarterly loss of $0.58 cents per share, which management attributed to markdowns. The company reported earnings of $0.35 a share in the year-ago period.
The company posted $1.46 billion in revenue, which marked a 1.7% decline year-over-year, even though it beat the Zacks Consensus Estimate of $1.42 billion.
Dillard's merchandise sales dropped by 1% to roughly $1.39 billion. Comparable-store merchandise sales were also down 1% from the year-ago period.
Shares of Dillard’s sank 14.64% on Thursday on the back of its less-than impressive second-quarter results.
Other Department Stores
Macy’s often has the power to swing the whole retail sector when it reports, as it showed last quarter. Now, on the back of the department and retail giant’s second-quarter earnings, other retail chains have felt the hit.
Dick's Sporting Goods DKS stock plummeted 7.37% to hit a new 52-week intraday low of $33.49 per share.
Shares of American Eagle AEO dropped by 5.4% on Thursday, while Target TGT fell 3.96%. Nordstrom JWN and The Gap GPS stock both dipped by roughly 2%. Shares of Wal-Mart WMT sunk just under 1%.
Retail sector EFTs also fell on Thursday. Shares of the SPDR S&P Retail ETF XRT fell 2.39%, while the Direxion Daily Retail Bull 3x Shares ETF RETL dropped 5.49%.
The Amplify Online Retail ETF IBUY, VanEck Vectors Retail ETF RTH, and PowerShares Dynamic Retail Portfolio ETF PMR all fell marginally as well.
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