Big Retailers Give Unhappy New Year News to Investors

As we kick off 2021, some of the biggest retailers are not bringing good news to their investors. Macy’s, Lululemon, Chico’s and Abercrombie & Fitch all reported their holiday season sales results, and the news was largely negative. The common theme among these retailers is that sales and earnings came in below expectations. Let’s take a closer look at what this means for investors.

Macy’s Results Come in On Low End of Expectations
Macy’s reported sales of $8.16 billion to $8.40 billion, which is at the lower end of its guidance range of $8.16 billion to $8.40 billion. Earnings are expected to be within the guidance range of $1.47 to $1.67 per share as well, but this still marks a significant decline from 2019 numbers when earnings per share was at $3.17 per share pre-pandemic levels. This performance reflects a larger trend among department stores who are seeing fewer shoppers due to the pandemic and shifting consumer preferences towards online shopping options instead of brick-and-mortar locations.

Lululemon Stock Falls 10%
Yoga apparel retailer Lululemon has seen extraordinary success over the past year as people have embraced more activewear for working out and lounging at home during pandemic lockdowns around the world. However, Wall Street had set very high expectations for the company heading into holiday season 2020 with analysts expecting an increase in same store sales by over 24%. Lululemon fell short with an approximately 14% increase in same store sales from last year which caused its stock (LULU) to fall by roughly 10%. It remains to be seen if this will be a long-term trend or just a temporary blip on the radar for Lululemon as they adjust their strategy going forward into 2021 given current market conditions and consumer preferences worldwide.

Chico’s Announces Lower Than Expected Guidance Numbers Women’s apparel retailer Chico’s announced total net sales ranging from $505 million to $515 million for fiscal 2020 ending January 30th, 2021, which is significantly lower than their previously guided range of ($564 million) to ($539 million). Additionally, diluted earnings per share came in at ($0.02) to$0.00 versus prior guidance estimates between ($0.18) to ($0.08). This could point towards further weakness in consumer demand due to economic uncertainty caused by pandemic lockdowns across much of North America and Europe throughout 2020 even though many retailers were able to benefit from strong eCommerce growth throughout most of 2020.

Abercrombie & Fitch Sees Increase Over Last Year Abercrombie & Fitch (ANF) was one of the few bright spots on Monday with its announcement that it expects total company net sales for fiscal 2020 ending January 30th, 2021, between (-13%) to (-10%). This represents an improvement over last year when total company net sales decreased by 16%. This suggests that Abercrombie & Fitch may have been slightly better positioned than other retailers heading into holiday season 2020 given its strong eCommerce presence compared to competitors like Macy’s or Chico’s who are lagging behind in this area.

Conclusion: All in all, it looks like it has been an unhappy New Year start for many retail investors who were expecting improved results after several months of strong eCommerce growth throughout 2020 due to widespread pandemic lockdowns worldwide. It remains unclear how long-lasting these trends will be, but it is safe to assume that retailers need need adapt quickly going forward into 2021 if they want to remain competitive in rapidly changing markets while simultaneously dealing with ongoing economic uncertainty globally. Looking ahead, it appears that agile strategies, digital transformation initiatives and innovative approaches will become even more important than ever before if companies want to thrive beyond just surviving during these unprecedented times.

Featured: $M $LULU $CHS $ANF

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