Forget love — investments into publicly traded companies make the world go round. However, when a retailer whose performance was once seen as a bellwether for an entire vertical starts to post poor results quarter after quarter, those investments are going to be in serious danger of drying up.
Unfortunately, for Macy's and several other retailers downstream, that seems to be happening.
Reuters reported that Macy's latest earnings report, which saw the retailer post a 7 percent year-over-year loss in same-store sales, has prompted investors in the retail space to pull back nearly across the board with their tied-up funds. Macy's may have suffered one of the biggest individual blows, as its stock dropped 15.2 percent to its new five-year low of $31.38. Fossil Group also felt the hurt via a 29.1 percent dropoff. But the pain didn't stop there — Nordstrom shares were down 7 percent, Tiffany & Co. slipped 6 percent and Target fell 5.4 percent.
All in all, retail's terrible, horrible, no good, very bad day on the stock market caused the S&P 500 retail index to slide by 1.9 percent.
It's enough to make even experts like Quincy Krosby, market strategist at Prudential Financial, question some tropes of retail's difficulties over the last few months.
"You heard one after another during the earnings season talk about the difficulties — they're cutting, they're closing stores," Krosby told Reuters. "The fact of the matter is there have been questions about retail spending, and valuations overall in consumer discretionary were rich."
With more legacy retailers heading for the waters of Chapter 11 bankruptcy every month, it'll be interesting to see whether investments in traditional brands can regain their previous levels, just as investors try to regain their previous confidence. However, that's easier said than done when tentpoles like Macy's struggle to string together profitable quarters even back to back.