NEW YORK — U.S. stock markets tumbled on Tuesday, propelled partly by lowered earnings guidance from Sears Holdings Corp.
Sears said in a statement that second-quarter profit would drop to between $160 million and $200 million, or $1.06 to $1.32 per diluted share, including a gain of $12 million, or 8 cents, because of a bankruptcy settlement and investments. That compares with $294 million, or $1.88 per diluted share, in the year-ago period.
In addition, same-store sales declined 4 percent at Sears and 3.9 percent at the Kmart chain in the first nine weeks of the second quarter that ends Aug. 4.
Sears shares fell 10 percent on the Nasdaq exchange to close at $154.21, the stock's biggest drop in four years and the second consecutive earnings miss for the chain led by chairman Edward Lampert, who combined Sears, Roebuck & Co. and Kmart in 2005.
"Although we believe our business has suffered from many of the same factors that have led other retailers to announce disappointing results and lowered expectations, our recent performance underscores our ongoing need to become more relevant to consumers while improving our discipline around expense management," Aylwin Lewis, Sears chief executive officer, said in a statement.
The Dow Jones Industrial Average fell 1.09 percent to 13,501.70. The S&P 500 lost 1.4 percent to 1510.12 and the Nasdaq declined 1.2 percent to 2639.16.
Sears said the slide in overall comps was in most categories, although there were slight gains in women's apparel and footwear. Sears, based in Hoffman Estates, Ill., operates more than 3,800 namesake and Kmart stores nationwide.
Sears also approved the repurchase of as much as $1 billion in stock, and S&P lowered its outlook for the company to negative.
Separately, Morgan Stanley analyst Michelle Clark initiated coverage of teen retailers with a bleak outlook based partly on the sector's mature core concepts.
Clark started Aéropostale Inc. and American Eagle Outfitters Inc. each with an "equal-weight" rating. She sees a near-term upside for Aéropostale shares, but raised concerns of a possible margin slowdown as the company focuses on next-stage growth. Shares of Aéropostale closed at $41.49, down 2.5 percent in New York Stock Exchange trading. For American Eagle, Clark sees a limited further upside to company shares, as well as returns contracting due to declining margins and slowing asset turns. Shares of American Eagle, however, closed at $26.41, up 2.1 percent, in trading on the NYSE.Clark also started coverage of Abercrombie & Fitch Co. and Urban Outfitters Inc., both with an "underweight" rating. "The market has started to value Abercrombie more on returns and less on growth as existing formats near domestic capacity and sales productivity growth slows," Clark said. Shares of Abercrombie fell 5.4 percent to close at $69.07 in Big Board trading. Shares of Urban Outfitters dropped 5.7 percent to close at $21.81 in over-the-counter trading after Clark said Street expectations of the timing of a turnaround were "too optimistic."
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews