Stocks are off to a rocky start this morning with no help from dismal earning reports from consumer-based companies.
The S&P 500 fell 7 points to 2,077, the Dow Jones Industrial average dropped 80 to 17,849 and the Nasdaq declined by 12 points to 4,797. The S&P Retail ETF is losing $1.47 to sell at $42.19.
Macy’s Inc. stock is tumbling over 9 percent to $33.56 after the department store chain delivered more disappointing financial news. Sales fell 7.4 percent to $5.77 billion in the quarter, partly due to the closure of 41 stores. Analysts, though, had taken that into account, but the sales still missed the estimate for $5.94 billion. The lack of big-spending tourists continues to bedevil Macy’s as well as weakness in overall consumer apparel spending. Macy’s believes that new exclusive merchandise will motivate shoppers to come back to the store.
Fossil Group continues to get hit hard with the stock plummeting over 30 percent to $27.45 following the watch company’s first-quarter earnings. While Fossil’s current quarter earnings weren’t horrible, the company slashed the sales forecast for the next quarter and the year. Many investors took to social media to joke that the company’s name was prophetic and questioned the future of watches. The acquisition of wearable tech brand Misfit will continue to cost the company and the benefits won’t be seen for at least a year.
Michael Kors Holdings Ltd. is sliding 10 percent this morning to $44.98 on a rumor that Nordstrom is cutting back on its Kors watches in its stores. It is also down in sympathy to the continuing decline in watch sales as evidenced by Fossil.
Fitch Ratings has downgraded The Gap Inc. to BB+ from BBB-. The outlook for the chain remains at “Stable.” Fitch said the downgrade reflects reduced confidence in the stabilization of sales, expectations of gross margin volatility and the belief that the Gap will have to resort to real estate actions and cost reductions in order to offset sales declines. So far Gap stock has weathered the downgrade and the stock is up 5 cents to $19.34.
Phoenix Footwear Group Inc. reported first-quarter results that saw net sales decrease $1.2 million to $5.5 million. The company left a large national retailer and has shifted to an online retailer causing the disruption in sales.
Looking ahead, Kohl’s Corp., Nordstrom Inc. and Dillard’s Inc. are all set to report their earnings on Thursday. Each of the companies is trading lower as a result of the Macy’s disappointment as investors assume they will reiterate some of the same challenges.