The Retail sector has been squarely on our radar throughout the holiday season, beginning with our warning that Black Friday optimism may be a misleading indicator given supply chain pressures, especially as mix shifts to e-commerce: see our Black Friday and Chico’s articles. Company updates this week support that concern, while layering on an additional headwind of weaker December demand.
Please note: This in no way represents investment advice. All transcript text provided by S&P Global Market Intelligence.
Macy’s disappointing 4Q sales update yesterday triggered a wave of concern across the Retail sector. We analyzed this week’s sales updates across the Retail sector this week through Amenity Analytics’ NLP platform, and identified two key takeaways, which imply risk to both revenue and margins:
Macy’s sales update press release registered an Amenity Score of 23, compared to the average of Macy's prior four earnings calls of 49, with the company citing a slowdown following the Black Friday pop.
"The holiday season began strong - particularly during Black Friday and the following Cyber Week,but weakened in the mid-December period and did not return to expected patterns until the week of Christmas."
Contrast that with:
"The holiday season began strong - particularly during Black Friday and the following Cyber Week, but weakened in the mid-December period and did not return to expected patterns until the week of Christmas."
Most retailers have only released sales updates, with full financial results and commentary to come in the coming weeks. Given the evidence of ongoing mix shift to digital and e-commerce, we look for headwinds from supply chain, shipping, and transportation costs to remain prominent on Q4 earnings calls.
"We experienced another period of double-digit growth in our digital business and continued strength in the Growth50 stores."
"...comparable sales declined approximately 1.8% with strong sales growth in our customer facing digital channels and a mid single-digit percentage decline in sales from our stores."
"Comparable digital sales growth of 29% in November/December was driven entirely by growth in store-fulfilled digital sales."
"We are particularly pleased with the positive transaction growth and the double-digit digital growth we experienced this holiday, as our customers continue to embrace the omnichannel investments we are making."
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Transcript text provided by S&P Global Market Intelligence.
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