Retail wreckage: Here are the numbers moving retail stocks Thursday
Friday, January 6, 2017
Courtney Reagan / CNBC
Jan. 5, 2017 CNBC.com
It was a tough holiday at the mall.
Shares of Macy's, L Brands, and Barnes & Noble were selling off Thursday, in wake of disappointing holiday sales. For Macy's, the report of a difficult holiday season was coupled with more details about planned store closures and news about layoffs. Sears also announced store closures and the sale of its Craftsman business.
Many retailers reported choppiness in the all-important holiday selling season, with consumers slowing their shopping — particularly in early December — more than expected. Despite a spike at the end of the season, RetailNext data gathered from hundreds of stores found that sales and traffic fell double-digits.
That's despite several recent reads on the holiday that pointed to stronger results. They include a report from Mastercard SpendingPulse, which recorded sales growth of 4 percent. Greater numbers of shoppers shifted their sales online, resulting in a record performance, and the big beneficiary of that trend was Amazon.
"Weak holiday sales results for Macy's and Kohl's reflect the continued secular challenges that plague the department store industry," said Christina Boni, a Moody's vice president and senior analyst, in a research note. "We expect the shift of purchases to alternative channels such as online and the off-price channel to continue in 2017. Lean inventories entering fourth quarter were not enough to support profitability targets at either Macy's or Kohl's given the disappointing sales performance."
To see how the holiday results are shaping up for the retail sector, here's all the numbers at a glance.
- November & December comparable sales down 2.1 percent
- Lowering full-year EPS guidance range
- Expects the holiday comparable sales trend (down 2.1 percent) to continue through 2017
- Cutting 10,100 total jobs: 6,200 from corporate, 3,900 from stores. The store associates are mostly from the 68 store closures that will happen this year (part of the 100 store closures announced in August that will occur over several years).
- The restructuring will save $550 million annually, $250 million will be invested in growth initiatives (like online, mobile, Bluemercury, China partnership with Alibaba)
- November & December comparable sales down 2.1 percent
- Lowering full-year EPS guidance range, now below Street estimates.
- Kohl's CEO Kevin Mansell said that holidays sales were "volatile," but sales over Black Friday weekend and before Christmas were strong. He noted that there were bigger than expected lulls in early November and December.
- Thus, the sales that happened, were at deeper discounts, thus gross margin is now expected to be below plan.
Brands include Tommy Hilfiger, Calvin Klein, Van Heusen, IZOD, Warner's, Speedo, Olga
- PVH Corp sells products at both Macy's and Kohl's, as well as others, but says that EPS will come in at least at the top end of previous guidance.
- Sears is selling Craftsman brand to Stanley Black & Decker for $775 million
- The company is closing an additional 150 stores
- November and December holiday comparable sales down between 12 percent and 13 percent at Sears & Kmart.
- Adjusted EBITDA performance is largely in line with last year, despite the sales declines.
American Eagle Outfitters
- Fourth-quarter comparable sales at American Eagle Outfitters are flat to-date and guidance was expected to be flat to up low single digits. FactSet estimated sales to be up 1.7 percent.
- The company reaffirms fourth-quarter EPS guidance of $0.37 to 0.39. FactSet estimates EPS at $0.39.
- "The holiday sales season was choppy and highly promotional, but overall, I'm pleased that we are meeting many of our objectives for the quarter," CEO Jay Schottenstein said. "We had a strong Thanksgiving shopping period, and despite traffic weakness in the malls leading into Christmas, our online sales for both American Eagle and Aerie were strong throughout the season. We remain focused on continuing to deliver our key merchandise and operational initiatives, and I'm confident in our prospects as we look ahead to 2017."
Barnes & Noble
- November and December comparable sales at Barnes & Noble are down 9.1 percent.
- November and December online sales are up 2 percent.
- December comparable sales for L Brands are down 1 percent.
- By brand: Victoria's Secret is down 4 percent, while Bath & Body Works is up 3 percent.
- The company guides that fourth quarter EPS will be to the lower end of prior $1.85 to $2.00 range, FactSet estimates EPS to be at $1.97.
- December comparable sales at Costco are up 3 percent versus an estimate of 2.4 percent.
The Children's Place
- The Children's Place raised its fourth quarter and fiscal year 2016 comparable retail sales and adjusted its diluted EPS guidance.
- Fourth-quarter guidance: Adjusted diluted EPS to be in the range of $1.53 to $1.58 versus prior $1.43 to $1.48 and FactSet $1.50; assumes a comparable sales increase of about 6 percent to 7 percent for the quarter against a 6.7 percent increase in fourth-quarter 2015 and previous guidance of a low single-digit increase
- Full-year guidance: Adjusted diluted EPS to be in the range of $5.10 to $5.15 versus prior $5.00 to $5.05 and FactSet $5.09; assumes a comparable sales increase of about 5 percent for year. This guidance for adjusted diluted EPS excludes net charges of about $0.2 million as of the end of the third quarter, primarily related to asset impairment charges and income related to the release of reserves for prior year uncertain tax positions that the company believes are not reflective of the performance of its core business.
- "Our comparable retail sales were positive 6.9 percent through the first nine weeks of Q4, compared to positive 7.3 percent in the comparable nine week period in Q4 of 2015," Jane Elfers, its president and CEO, said. "Based on these outstanding results, we are increasing our Q4 and fiscal year 2016 guidance for comparable retail sales and adjusted diluted EPS."
- There are reports that Amazon and Forever 21 are possible interested buyers for the American Apparel, auction on Friday.
- American Apparel is valued at $66 million and currently has its production in U.S. So there's a political play here as well.
- Canada's Gildan has already made bid so another suitor would have to come in higher
- Amazon netted out with a consistent share of 38 percent in both 2015 and 2016, according to Slice Intelligence.
- Amazon's share of U.S. e-commerce sales grew significantly as it got closer to Christmas and Hanukkah, Slice said.
- From Nov. 1 through Cyber Monday, Amazon's share of e-commerce was 33 percent, compared with 44 percent during the final stretch (Dec. 15-Dec. 25), per Slice.
- However, this was consistent with Amazon's share during the 2015 holiday season.
- Wal-mart/Jet confirmed to CNBC that it has purchased the Shoebuy website from IAC for about $70 million.
- The 2016 holiday season (Nov. 1 – Dec. 31) brought in $91.7 billion in online sales, according to Adobe. That's an 11 percent increase year-over-year, and 0.13 percent (or $115 million) more than the company's original prediction of $91.6 billion, Adobe said.
- 57 out of 61 days this holiday season generated over $1 billion, it reported.
Slice Intelligence scan of more than 4 million email receipts determined:
- Thanks to new Apple Watch and MacBook, Apple was the fastest-growing merchant this holiday season with online sales growing 66 percent over the last year.
- Lowe's online sales grew 58 percent.
- Home Depot online sales grew 40 percent.
- Best Buy online sales grew 31 percent.
- Wayfair online sales grew 27 percent.
- Sales and traffic tracked by the firm fell double-digits over the holiday months
- That includes a 10.7 percent slide in December sales, and a 13.4 percent drop in traffic that month
- Revenue, traffic and transactions peaked on Dec. 23, driven by last-minute shoppers
—CNBC's Sarah Whitten, Christina Cheddar Berk, and Krystina Gustafson contributed to this report.
Correction: This story has been updated to reflect that Bath & Body Works comps were up 3 percent.