Macy's forecast helps trigger sell-off in U.S. retailers

Wed May 11, 2016 4:58pm EDT
 
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By Caroline Valetkevitch

NEW YORK (Reuters) - Investors heavily discounted U.S. retailers on Wednesday after a series of disappointments in the sector, including a weak forecast from Macy's Inc (M.N: Quote).

Macy's stock dropped 15.2 percent to $31.38, the lowest since December 2011, after the company posted a much bigger-than-expected drop in quarterly sales and slashed its full-year forecast.

The stock helped lead a 1.9 percent decline in the S&P 500 retail index .SPXRT.

The selling quickly spread in the sector as the outlook for brick-and-mortar retailers weakened. Shares of Fossil Group (FOSL.O: Quote) fell 29.1 percent, also following disappointing results and a worse-than-expected forecast.

Nordstrom Inc (JWN.N: Quote), due to report results on Thursday, was down 7 percent, while Tiffany & Co (TIF.N: Quote) fell 6 percent and Target Corp (TGT.N: Quote) shed 5.4 percent. Real estate investment trusts tied to mall properties also fell sharply, including Simon Property Group SPG.N, whose 5 percent decline was its biggest since 2011. A regional mall index .FTFN22 fell 5 percent.

In another blow, Office Depot Inc (ODP.O: Quote) and Staples Inc (SPLS.O: Quote) shares sank after a federal judge late Tuesday granted a request to stop their planned merger because of antitrust concerns.

Brick-and-mortar retailers have suffered as consumers increasingly shop on Amazon.com (AMZN.O: Quote) and other online sellers.

"You heard one after another during the earnings season talk about the difficulties - they're cutting, they're closing stores," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. "The fact of the matter is there have been questions about retail spending, and valuations overall in consumer discretionary were rich."   Continued...

 
People hold Macy's shopping bags outside the store at the Herald Square location in New York, U.S., May 9, 2016.    REUTERS/Shannon Stapleton