This Month's Bad News for Retail Could Be of the Fundamental Variety

The retail sector got a wake up call this month.

1 minute read

May 29, 2016, 5:00 AM PDT

By James Brasuell @CasualBrasuell


Sports Authority

Sergey Yechikov / Shutterstock

Joan Verdon reports on "unexpectedly dismal earnings reports from five of the country’s largest department store chains, all delivered within the same week"

"The bad news cut across all categories of department stores," according to Verdon, "from the value-priced Kohl’s (comparable sales down 3.9 percent) to the midpriced Macy’s (sales off 5.6 percent) to the upscale Nordstrom (sales fell 1.7 percent)."

Unlike previous downturns, the concern in 2016 is that the poor performance of these retail mainstays "isn’t just a rough patch but a permanent shift in spending habits that could lead to changes as sweeping as when suburban malls first arrived to challenge Main Street merchants." That fundamental shift isn't just about Amazon.com and other delivery services, according to the article. It's also about Americans deciding that "paying off debt and putting money into savings, as well as going on vacation, are more important to shoppers than new purchases…" The article details more of the data, also finding specific store (like home improvement stores Home Depot and Lowe's) that performed well in May.

As if on cue, Sports Authority also announced bankruptcy and a wave of store closures in May. Mark Haden reports that the store will close all 450 of its remaining stores.

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