The global stock meltdown continues, led once again by China.
The U.S. markets have weathered the global stock storm relatively well with much smaller losses as buyers were motivated by lowered stock prices.
At the midday, the S&P 500 was dropping only 1 percent or 24 points to 1,965, the Dow Jones Industrial Average was falling by 193 points or just over 1 percent to 16,713 and the Nasdaq was declining the most at 1.6 percent or 76 points to 4,759.
Macy’s stock was moving up over 3 percent to $37.31 after Wednesday’s announcement that the department store chain would close 40 stores and cut 4,800 jobs. The unusually warm holiday weather devastated the company’s sales as comparable sales for November and December fell 4.7 percent. Heavypromotions failed to motivate shoppers to stock up on sweaters, coats and scarves. Macy’s will consolidate its stores and regions, cut jobs in the back offices and merge credit and customer service centers. Macy’s is also searching for a real estate executive as the company takes a hard look at its property assets. Investors were pleased to see that Macy’s was making big changes in reaction to poor sales.
In contrast to Macy’s, J.C. Penney was able to overcome the warm winter weather issues with record online sales. The stock is up over 3 percent to $7.29 after the discount chain said same store sales rose 3.9 percent for November and December. The company reaffirmed its full-year adjusted earnings before interest, taxes, depreciation and amortization target of $645 million and plans to generate positive free cash flow in fiscal 2015.
Finish Line is plunging by more than 9 percent to $16.68 after the sneaker chain said third-quarter earnings missed analyst expectations. Finish Line blamed its problems on a disruption in its supply chain following the implementation of a new warehouse and order management system. Third quarter comp sales decreased by 5.8 percent. Once those problems were fixed sales picked up, but not in time to help the quarter. Comp sales for the fourth quarter to date were up 6.2 percent. Finish Line issued downside guidance for the fourth quarter for earnings in the range of $0.78-$0.83.
Zumiez also reported better than expected sales results. While sales dropped, they didn’t drop as much as analysts had expected. The stock popped over 17 percent to $17.66 after the specialty chain raised earnings and sales guidance. Zumiez also said it was closing its fulfillment center and plans to handle online sales within the stores.
Hudson’s Bay Co. stock was losing over 3 percent in early trading, but by midday was slightly higher to sell near 16.99 Canadian dollars, or $12.07 at current exchange, after the company disclosed it was buying online luxury flash sale company Gilt Group. At one time Gilt Groupe was valued at $1 billion and it was expected that the company would go public, but it never got to that and instead has sold for $250 million, a fraction of that amount. HBC will fold Gilt into its Saks Off 5th brand.
Earlier today, the Chinese Shanghai Composite dropped 5 percent immediately at its open, causing market trading to be halted for the second time this week. Once trading resumed, the market extended losses to 6.9 percent forcing the market to close again as the trading session lastedonly 45 minutes. The selloff was triggered by the weakening Chinese currency, the yuan. Europe actually had some good economic data on Thursday, but it wasn’t enough to overcome the Chinese market crash and all the major indices fell. The German DAX closed down 2 percent at 9,979, the French CAC ended the day down 1.7 percent at 4,403 and the U.K. FTSE closed down 1.9 percent at 5,954.