Weak Holiday Comp Sales Reports Drive Traditional Retail Stocks Down

Weak holiday sales reports sent Kohl's Corporation KSS and JC Penney Company Inc JCP shares tumbling Thursday while bolstering the notion of a humbug holiday for traditional retailers who couldn't compete with online sellers.

Kohl’s announced a 0.2% drop in comparable store sales in November and December and said it expects earnings for the year to be near the bottom of its forecast range of $4.75 to $4.95. Kohl's stock was down more than 9% Thursday as BofA lowered its rating on the stock.

JC Penney saw a much bigger drop, with sales off 7.5% in the nine-week holiday period. The company's stock also dropped more than 9% on the news.

Holiday Shopping Saved By E-Tail

While overall holiday sales were up this year by more than 3%, that was thanks mostly to online shopping, which was up nearly 19% year over year from the beginning of November to Christmas.

Kohl's CEO Michelle Gass said its woes came from "softness in women’s (apparel), which we are working with speed to address."

“E-commerce is definitely compromising the competitiveness of the physical assets of retailers,” CFRA Research analyst Camilla Yanushevsky told Reuters on Thursday.

The news from Kohl's and JC Penney followed Wednesday's report by Macy's Inc. M that its same-store sales were also down during the holidays, although its 0.6% drop wasn't as bad as Wall Street had expected. Still, Macy's said it would close nearly 30 stores, and its stock was also headed down on Thursday, off more than 3% from its open.

It also followed a tough third quarter report Wednesday from Bed Bath & Beyond Inc BBBY, which blamed the calendar shift of Thanksgiving and the resulting shorter holiday season for an 8.3% drop in comps that continued to drop its stock on Thursday, with shares down 17.48% to $13.72.

Other Holiday Sales Reports

Other holiday sales reports mostly reinforced the narrative of a weak year for brick and mortar retailers:

• L Brands Inc LB holiday comps were down 3% year-over-year and the Victoria's Secret owner cut its fourth quarter EPS guidance. L Brands stock was up, however, by 1.21%.
• Women's retailer Cato Corp CATO stock was down after it reported flat holiday sales. Its shares were down 1.8% to $17.40.
• There were a couple of traditional retailers that bucked the trend, including clothing chain Buckle Inc BKE, which reported December comps up 5% and saw its shares rising Thursday, and Costco Wholesale Corporation COST which was one of the holiday winners with comps up 9%, pushing its stock higher by 2%.

Related Links:

Bed Bath & Beyond Reports Big Q3 Earnings Miss, Withdraws Guidance

Bank Of America Downgrades Kohl's After Disappointing Holiday Sales