The holiday season was a bit less merry, from a comparable sales perspective, than Macy’s had been forecasting, as the department store retailer cut its holiday sales forecast. That change, combined with more sluggish than expected year-end growth from Kohl’s, was sufficient to spook retail investors and send share prices down across the segment.
Macy’s was hit hardest by investor ire, with its share price down 16 percent in premarket trading on the news, while Kohl’s fell 5 percent. Target, which actually reported stronger than forecasted growth in November and December, got dragged down in the sour mood in the market by 1 percent.
Macy’s said its less than expected performance issued from mid-December sales weakness, but didn’t detail what happened in mid-December to take the wind out of their sails.
“The holiday season began strong – particularly during Black Friday and the following cyber week – but weakened during the mid-December period, and did not return to expected patterns until the week of Christmas,” said Jeff Gennette, chairman and chief executive officer at Macy’s.
The department store chain chopped its comparable sales growth forecast for its final fiscal quarter and now expects 2 percent growth, down from a previous outlook of 2.3 percent to 2.5 percent growth.
Kohl’s reported anemic comparable sales growth of 1.2 percent during the final two months of 2018, down from 6.9 percent a year earlier.
The Macy’s and Kohl’s miss stood out particularly since sales for the 2018 U.S. holiday shopping season were their strongest in six years, according to a Mastercard report in late December.
Target Corp. managed to more effectively surf that enthusiasm wave, with sales up 5.7 percent during November and December, helped by higher customer visits and strong online sales during the holiday season.
Target forecasted same-store sales growth of about 5 percent for the fourth quarter through January, while comparable sales had grown 3.4 percent in the November-December period last year. The Minneapolis-based retailer also reaffirmed its full-year earnings and sales forecast, putting it on track for the strongest full-year comparable sales growth since 2005.