- Slashed full-year profit outlooks are weighing on retail stocks ahead of the important holiday season.
- After disappointing earnings reports this week, the S&P 500 Retail Index is down 4%.
- The slide was led by double-digit drops in Macy's and Kohl's.
- Here are three companies that cut profit expectations for the rest of the year, and how it has affected their stock prices.
- Read more on Business Insider.
Big third-quarter earnings misses by retailers over the last week are dragging on the entire retail industry before the holiday season.
Double-digit stock price slides from Macy's and Kohl's weighed on the S&P 500 Retail Index, which lost as much as 4% this week. The S&P 500 index has only fallen as much as 0.2% in the same period.
Weak sales, disappointing earnings, and lowered full-year profit forecasts led declines. It was the second time this year that Kohl's and Home Depot have lowered earnings expectations, which is not a good sign going into the holidays, the busiest and most important season for retailers.
In 2018, the holiday season contributed to a strong end of the year for retailers such as Target, Lululemon, American Eagle, and Kohl's. But the year-end boost hasn't totally translated into success in 2019 — companies such as Sears, Kmart, and Walmart have had to shut stores in the ongoing retail apocalypse.
Not all recent earnings have disappointed. Retailers Target,Gap, and Walmart posted third-quarter results that exceeded analyst expectations.
But, those reports and subsequent stock gains weren't enough to lift the struggling industry as a whole. The S&P 500 Retail Index has gained only slightly more than 5% year-to-date, while the S&P 500 has gained nearly 24%.
Here are the key numbers from three companies that lowered full-year profit outlooks, and how much the stock has been affected:
1. Home Depot
Ticker:HD
Reported earnings: November 19
- Adjusted earnings per share: $2.53 reported versus $2.53 (expected)
- Revenue: $27.22 billion reported versus $27.72 billion (expected)
- Same-store sales: +3.6% reported versus 4.6% (expected)
Full-year EPS guidance: Maintained expectation of $10.03 but trimmed full-year comparable sales to 3.5% from 4% and revenue outlook to growth of 1.8% from 2.3%
Stock decline post-earnings through Thursday's close: -8%
2. Kohl's
Ticker:KSS
Reported earnings: November 19
- Adjusted earnings per share: 74 cents, versus 86 cents (expected)
- Revenue: $4.36 billion, versus $4.40 billion (expected)
- Comparable sales growth: 0.4%, versus 0.8% (expected)
Full-year EPS guidance: $4.75 to $4.95, versus prior guidance of $5.15 to $5.45
Stock decline post earnings through Thursday's close: -19%
3. Macy's
Ticker:M
Reported earnings: November 21
- Adjusted earnings per share: 7 cents reported, versus 1 cent (expected)
- Revenue: $5.17 billion reported, versus $5.30 billion (expected)
- Same-store sales: -3.9% reported, versus -1.2% (expected)
Full-year EPS guidance: $2.57 to $2.77, previously saw $2.85 to $3.05
Stock decline post earnings through Thursday's close: -2.3%