Macy’s stock plummeted nearly 20 percent on Thursday after the retailer revealed the critical holiday shopping season fell short of rosy expectations.
While the holidays kicked off great but then sales stumbled and a fire at a West Virginia distribution center snarled customer orders.
“The holiday season began strong — particularly during Black Friday and the following Cyber Week, but weakened in the mid-December period,” said CEO Jeff Gennette.
Macy’s stock fell as low as $25.50, down $6.22 or 19.6 percent, ending the day at $26.11, down 17.69 percent. It was the biggest loser Thursday on the New York Stock Exchange.
The update came just two months after Macy’s said 2018 would end strong. On Thursday, the retailer its year-end profit and sales forecasts. Those numbers will be reported on Feb. 26.
The retailer now expects earnings per share to range between $3.95 to $4.00, down from the previous range of $4.10 to $4.30. Total annual sales are now expected to be flat versus a previously expected 0.3 to 0.7 percent uptick. The company also said its gross profit margin will shrink, rather than grow.
A prominent retail analyst says that the shift to online spending as well as the volatile stock market hurt Macy’s during the holiday.
Ken Perkins of Retail Metrics says the two combined elements were an obstruction for Macy’s during the most critical period of the year for retailers.
With low unemployment, rising wages and consumer confidence high, there had been optimism about holiday sales receipts. But investors were caught off guard when Macy’s cut its full-year earnings and sales forecasts. Kohl’s also reported sales numbers that were far inferior compared with last year.
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Shares in Kohl’s slid as much as 9 percent and Target and Nordstrom also fell lower.
With low unemployment, rising wages and consumer confidence high, there had been optimism about holiday sales receipts. The pessimism on Wall Street spread quickly from department stores to virtually all other retail sectors, including specialty, dollar stores, luxury, and athletic apparel.
The Associated Press contributed to this story.