NEW YORK (AP) — Macy’s is acknowledging that there will be no consumer splurge anytime soon.
A gloomy holiday shopping season across the retail spectrum has seeped into a spring funk. And after some startling numbers and projections from the Gap earlier this week and then Macy’s Wednesday, investors had seen all they needed to see.
Shares tumbled across the sector with the bulk of retailers yet to report quarterly earnings.
Macy’s stock plunged 14 percent to levels not seen in four years.
Ralph Lauren, Nordstrom, J.C. Penney and Kohl’s are all reporting this week, followed by Sears, Target and Wal-Mart the next.
Macy’s slashed its profit and sales expectations for the year after same-store sales dropped for the seventh time in 10 quarters. It announced plans to cut expenses and plow that money into more sales help at the stores and online.
“We are not counting on the consumer to spend more, so we are working harder to give customers more reasons to buy from us, “said Chairman and CEO Terry Lundgren in a company release.
Macy’s first-quarter income tumbled 40 percent and revenue fell 7.4 percent.
Macy’s report, which kicks off the first-quarter earnings season for major retailers, raises fresh concerns about the consumer and the health of stores, even after companies aggressively closed lower-performing locations.
It had appeared retailers were recovering after a brutal holiday shopping season as sales accelerated earlier this year. That trend appeared to stall in mid-March
Gap Inc. issued a profit warning for the first quarter Monday as an attempted turnaround this spring sputtered. On Wednesday, Fitch Ratings cut its rating to junk status.
The red flags from Gap and Macy’s follow a report last week from the owner of Victoria’s Secret, usually a strong performer, which showed that sales in April had stagnated.
Retailers suffered tremendously during the recession but the economy has bounced back strongly since then and consumers are spending.
The U.S. reported Friday that employers had added 160,000 jobs in April suggesting that the job market continues to generate steady hiring. The average job gain in the prior six months before April was 243,000.
While consumers are spending again, they’re not doing it at department stores, with more money going toward restaurants, travel and home improvement. And when they do shop for clothes, increasingly they are doing it at discount stores like T.J. Maxx, or online at Amazon.com.