The evidence just keeps building that consumers have slammed their wallets shut when it comes to buying apparel.
A trio of major department stores — J.C. Penney Co. Inc., Kohl's Corp. and Nordstrom Inc. — all showed signs of wear and tear Thursday in reporting their first-quarter financial results. Profits at Penney's fell 49.6 percent, the bottom line at Kohl's slipped 26.8 percent and Nordstrom was off 24.2 percent.
Both Kohl's and Nordstrom also lowered earnings guidance for the year, signaling the struggling economy s hitting consumers at all levels of the spending spectrum.
"It's obviously a very difficult time for all U.S. consumers," said Myron "Mike" Ullman 3rd, Penney's chairman and chief executive officer, on a conference call. "They are facing uncertainty in their financial well-being. That uncertainty is caused by their lack of understanding of the true equity in their home. They are uncertain about their 401(k) or stock portfolio....They are uncertain about how they will manage their living expenses with the escalation of the cost of energy and food."
Ullman could easily have gone on.
Gasoline prices hit an all-time high Thursday, with a gallon of regular averaging $3.78, according to the American Automobile Association. Employers have cut a seasonally adjusted 260,000 jobs, according to government statistics.
And the three retailers only added to the drumbeat of downbeat news. Thursday's retail results came just a day after Macy's Inc. revealed first-quarter losses.
Even cheap-chic specialist Hennes & Mauritz, which has only a small part of its business in the U.S., is feeling a sales pinch. The Swedish company's sales, excluding currency changes, fell 1 percent last month. It is the first time in more than nine years the firm has reported a drop in monthly sales.
For retailers, that means markdowns over the next few months and cutting back on orders — not great for their vendors. Most retail executives have indicated they don't expect any improvement in their businesses through the rest of this year — with most not foreseeing any significant improvement until 2010.
Still, investors were upbeat on Thursday, perhaps because the numbers weren't quite as bad as feared by Wall Street. Overall, investors snapped up shares of women's apparel retailers and department stores, sending the S&P Retail Index up 1.9 percent to close at 419.58.
Penney's shares increased 4.7 percent to $46.32, Nordstrom's stock increased 3.2 percent to $37.29 and Kohl's was up 1.8 percent to $50.49. Both retailers reported first-quarter results after the market closed.
Elsewhere in the department store sector, Saks Inc. spiked 8.5 percent to end the day at $14.55, and Sears Holdings Corp. was up 2.2 percent to $96.85.
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