Holiday season reporting is coming in mostly disappointing as retail sector gets pummeled. Macy’s, Kohls, and L Brands reported lower holiday sales when compared to the prior year, while Target was the lone standout with a strong increase in sales.
Macys shares were destroyed after reporting poor holiday sales and cutting their forecasts for 2018. CEO Jeff Gennette said, “The holiday season began strong – particularly during Black Friday and the following Cyber Week, but weakened in the mid-December period and did not return to expected patterns until the week of Christmas.” Some analysts are citing a warmer December as being a negative catalyst for sales.
Kohl’s reported comp sales growth of 1.2%, which was significantly down from the 6.9% printed during the same time a year ago. Many analysts expected Kohl’s to have stronger results and benefit from the Toys R Us liquidation.
Target’s holiday sales report was strong, but the negative sentiment painted by the rest of the industry dragged their shares lower. They noted they are on track to deliver Target’s strongest full-year comparable sales growth since 2005.
Expectations last month were fairly high for the retail sector to deliver strong holiday results. The ongoing government shutdown and downbeat holiday reports are shifting expectations for a retail slowdown. US stocks are off the session lows, but gains are limited as concerns remain in place for a softer earning season. The stronger dollar, partial government shutdown, trade war aftermath and slower global growth may lead to a less optimistic outlooks for corporate earnings outlooks.
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