Retail Bloodbath: Macy's Crashes After Woeful Results, Drags All Department Stores Lower

Tyler Durden's picture

Retailer woes continued this morning when Macy's reported another round of pitiful quarterly earnings, which saw comp store sales at owned plus licensed stores tumble -4.6%, below the already depressed estimate of -3.5%. On an "owned" basis, the miss was even worse, with Q1 comps sliding -5.2%,, almost twice as bad as the consensus estimate of -3.0%.

Earnings were just as bad with the company reported Q1 adjusted EPS 24c on sales of $5.34 billion, missing estimates of $5.45 billion, barely making the lowest estimate; the profit margin also disappointed with gross profit printing at 38.1%, below the 38.84% estimate. Meanwhile, with Q1 inventory of $5.63 billion rising from $5.4 billion at year end, more margin eroding liquidation sales are likely on deck.

The only good news was that Macy’s maintained its fiscal 2017 sales and earnings guidance, which however was not nearly enough for the market, which has dragged Macy's stock lower by 12%, to the lowest since October 2011.

Macy's (and Kohl's which also reported and missed) numbers were so bad, they have dragged down the entire department store sector, with stocks sliding in the premarket as follows: Nordstrom -3%, J. C. Penney -4.6%. Earlier Dillard’s also reported 1Q net sales shortfall, with comps. down 4% y/y

Macy's is just the first of many retailers set to report what are likely to be very disappointing results. According to FactSet just over a third of the companies that have yet to report actual results for the first quarter are retailers. This is how the retail sub-industry earnings are poised to look as they come out: needless to say General merchandise and food retail stores, as well as Department Stores are poised for a bloodbath.

Some more details from FactSet:

  • Of the 13 retail sub-industries in the S&P 500, just four have reported or are expected to report earnings growth for the first quarter, led by the Internet & Direct Marketing Retail and Home Improvement Retail sub-industries.
  • The Internet Direct Marketing Retail sub-industry is expected to report the highest earnings growth of all 13 retail sub-industries at 22.4%. However, only two of the five companies in this sub-industry have reported or are expected to report earnings growth for the first quarter: Amazon.com ($1.48 vs. $1.07) and Netflix ($0.40 vs. $0.06).
  • The Home Improvement Retail sub-industry is projected to report the second highest earnings growth at 9.6%. Both companies in this sub-industry are expected to report earnings growth for the quarter, led by Lowe’s Companies. The mean EPS estimate for Lowe’s Companies is $1.05, compared to year-ago EPS of $0.87. Lowe’s Companies is scheduled to release results on May 24.
  • At the company level, 18 of the 37 S&P 500 companies in these 13 retail sub-industries are expected to report or have already reported EPS growth for the first quarter, led by Netflix (+567%), Amazon.com (+38%), Ulta Beauty (+24%), and Lowe’s Companies (+21%).

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JRobby's picture

"It's over for all of you!"

Sincerely, Amazon

847328_3527's picture

 

Macy's needs a strong ad strategy to boost sales and appeal to the American middle class consumers ......

How about advertizing they'll hire 10,000 rapefugees?

NugginFuts's picture

I was in the local mall last night for the first time in a long while. It looked nearly abandoned inside. Almost as many shops closed as open, little to no maintenance on the building showing signs of wear.... even the wife looked at me and said "Wow, this mall is dying." And this is the GOOD mall in our city. The other one is too scary to even visit without packing plenty of heat. 

froze25's picture

I typically avoid the mall at all cost, plenty of vacancy and usually its packed with "those" people, not shopping mind you, just "holding it down", "cold Chillin". I have to give it to amazon, they make it possible to avoid "those" people and just simply get the stuff delivered to your front door.

NoDebt's picture

The only thing that can stop Amazon now is the EPA.  No other force in the universe is strong enough.

 

 

You don't see the connection, do you?  OK.  Think about this: what's up with all those cardboard shipping boxes piling up in everyone's basement or garage?  Ah, you see it now, don't you?  Yeah, that's why I earn the big bucks.  Thinking outside the..... box.  <---- cringeworthy

11b40's picture

I take mine to be recycled.

You think these things get shipped to the retail stores without boxes?

CheapBastard's picture

I stopped going to Macy's and the other stores when they stopped putting up Christmas decorations.

Screw them!

Ever since Obama ordered Christmas trees be taken out of VA hospitals the media and many stores have been going overboard to be PC and failed to put up any Christmas decorations, not even a fucking tree?

Who are they trying to attract? Certainly not middle class Americans like me.

I was in Asia last Christmas and it was more "Cristmas-like" there then in America with happy people celebrating the time of year. Here in America Obama was banning Christmas, BLM killing police by the handful, depressed hateful Democrats, and people committing suicide at record levels.

8 years of Obama had consequences.

Ghost of Porky's picture

You dump the Trumps you get some lumps.

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Falling Down's picture

I burn cardboard and wood in massive pyres in my backyard.

Mr. Universe's picture

Do you light it with a shot of a flaming arrow? Only way to do it really.

Scooby Doo's picture

We usually use a torch hooked to the propane tank. But I like the flaming arrow idea

froze25's picture

The flaming arrow just has more elegance to it.

Offthebeach's picture

Of course.  Like, how else would you get rid of old batteries and cans of oil paint,  varnish and plastic lawn chairs, right?  Once it's really going good , in goes hosehold garbage and dead pets ( pet Valhalla).

Pro tip.  Night fires mask thick chem smoke.

WillyGroper's picture

put them under mulch.

makes a great weed barrier & decomposes nicely turning the soil into black gold.

NugginFuts's picture

The only thing this mall had going for it was a pet store with a good variety of animals. Can't really buy those on Amazon. However, I purchased the cage and everything else on Amazon for far cheaper than the store was selling it, so there's that. 20% cheaper with free shipping. 

I just kept wondering how the other stores in the mall were going to hold on without any customers. It was as you said - a bunch of people just hanging out. If that ain't recessionary, I don't know what is. 

Buck Johnson's picture

You have a point, now people don't have to walk the guantlet to buy things anymore.  Heck almost all malls are ending up this way anymore.  If your able to purchase something and get it the next day if not in some places the same day then why drive to the mall.  I mean really the only thing that the mall is now is for a place where the idiots and problem kids go to hangout and see if they can pick up girls.

 

 

DocBerg's picture

 

The only store I really like to shop at is Farm & Fleet. The drive there is relatively easy, and they usually have what I want. If I go to Kohls Office Max, or Carsons, I have to drive through a lot more traffic, then navigate my way through poorly laid out parking lots, while dodging crazed shoppers. Usually these merchants do not have what I need, so I have to go on-line. So, to avoid the hassles, I have learned to shop mostly on-line. Then, there is WalMart...

ejmoosa's picture

The malls around Georgia are beginning to look more like open air markets with a roof...

Madison&#039;s_Ghost's picture

Don't worry, they will make great FEMA cafeterias once the SHTF.

localsavage's picture

Wow, the Hampton's crowd doesn't know how to sell to middle America.  Who saw this coming.

Handful of Dust's picture

Middle America is broke. 8 years of Obamanomics hating the American middle class decimated it.

 

I went to the mall a few months ago and was one of the very few white person---24% black, 50% Hispanics and 24% Pakis/Iandians at least. Most had 3-4 shitlings hanging on to them also. Makes me wonder how many are on welfare and how many middle class workers it takes to support all this?

hedgewithme's picture

Let me give you an idea. I work with a lot of people who dundonutin all day. One arrived from Sierra Leon 3 years ago. As soon a she hit the US she was enrolled in medicare. She is on dialysis which runs a tab of about 50-80k per month. She has 4 kids all on state medicaid. And state housing. She goes through in a month what some citizens who actually worked would not even use in a lifetime. Maybe Macys should set up a dialysis center in the middle of the store to increase foot traffic. I have close to 90 other clients like this. The dialysis makes them too tired to do anything but sleep. When you have no more productive capacity it is time to pull the plug

JustPastPeacefield's picture

Exactly. Strangers in our own land. All the liberals left for their lily white suburbs long ago. 

 

Xena fobe's picture

Lots of Chinese and Mexicans in LA malls. 

zagzigga's picture

All discretionary money is going towards buying and upgrading so called smart phones. You can listen to music and watch movies on a smart phone. What entertainment do you get out of a pair of jeans or a dress?

aliens is here's picture

No need they are already hiring them by the thousands. Have you been to a Macy's lately? It's horrible the Macy's by where I live is staffed with 3rd world rift rafts, it's like I am in some 3rd world hell hole that sells over priced clothes.

dobermangang's picture

They should start selling guns and ammo.  The gun business is still strong.  They've slowed down since Trump got elected, but are still selling very well.  RGR just had an excellent earnings report.  

Handful of Dust's picture

Ruger sales are soaring. The stawk is up from 48 to 64 now and still rising last time I looked.

post turtle saver's picture

anecdotal evidence... most folks in my neighborhood a) are pretty well off (not super rich, just doing nicely), b) haven't set foot in a mall in years (if not decades), and c) do most of their shopping on-line and/or at Costco...

this is a demographic with solid spending power and excellent credit that traditional retail has nothing to offer to... and it's not gonna change anytime soon...

sharonsj's picture

Actually, I see this as proof of my theory that only people with money shop on line.  Everyone else can't afford it nor can they afford to buy at malls either.  Trump would have to keep his campaign promise of creating 200,000 new jobs a month--a promise I doubt he will keep--in order for regular people to be able to buy anything.

I am Jobe's picture

I guess those Ads are not working on TV. Only losers shop at Macy's who have no idea about child labor. Americans will be shopping at Goodwill and Dollar Store in the coming months . This is how exeptional things look like. Of course many Americans are told they are exceptional 

JRobby's picture

People have been shopping Thrift & Dollar Stores for 20 + years, accelerating over the past 9.

I am Jobe's picture

Now the majority will be.  

Government needs you to pay taxes's picture

Not to worry, soon there will be a wonderful new way to shop . . . no internet or shipping required.  Local corpses. . . . Everything you need, just in time!  The IPO of Americorpse might be smelly, but also smashing!

froze25's picture

I always shop Thrift and good will, why pay top dollar for something that no one you care about will give a crap about. Might as well spend 5 bucks rather than 200.

Arnold's picture

There has been a sale at the local Macy's over the past couple of months.

Gift cards and Black Friday prices.
The theater company scored some racks.
The Military museum scored some waif mannequins for the WAC uniforms...

spastic_colon's picture

macy's actually is a dollar store; they just put lipstick on the junk and mark it up.

Xena fobe's picture

Chinese and Mexico labor prices are rising.  Corporates still charging full price retail as always.  Yes, it's all junk.  JCP is even worse.  Stuff looks like rags picked from the dump.

Xena fobe's picture

Too many people shopping at Goodwill now.  Used to be a good place.  Now you have prople making a living reselling Goodwill finds on Ebay.

WillyGroper's picture

GW & SA stores are popping up like 7-11's here.

my best guess is what they collect from donations accounts for 98% adminstrative cost benefitting the hmfic's.

spastic_colon's picture

too much competition from all the fake macy's chinese crap being sold on amazon maybe?

seriously tho I've been to a macy's maybe twice in my life, one of them in new york, seven floors of absolute junk.

kizell's picture

And that's whole point I think.  I never buy shit at malls.  But I was meeting a girl there for a blind date, and while I was waiting, I walked through the 3 story macys.  During the walk I was thinking "what the fuck is in here worth buying."

YourAverageJoe's picture

The 2 Houston stores that were here at one time were dingy and run down, like they didnt believe in maintenance.