Shares of Macy’s and Kohl’s took a pounding on Thursday after the department store chains reported disappointing sales growth despite a generally strong holiday season for retailers.
Macy’s said sales slowed after a good start to the holidays, citing particular weakness in women’s sportswear, sleepwear, fashion jewelry, fashion watches, and cosmetics. Its same-store sales over the critical November and December months rose 1.1%.
The retailer also reduced its forecast for the full year to 2% growth in comparable sales, down from a previous outlook of 2.3% to 2.5% growth.
Kohl’s, meanwhile, said its same-store sales rose 1.2% in the last two months of 2018, compared to an increase of nearly 7% the previous holiday season.
In trading Thursday, Macy’s shares plunged 18.6% to $25.81 while Kohl’s shares were down 6.5% at $65.33.
As Reuters reports, the companies’ disappointing performance came as sales for the 2018 U.S. holiday shopping season rose to their strongest level in six years. According to a Mastercard report in late December, retail sales from Nov. 1 through Christmas Eve were up 5.1% to more than $850 billion.
Mastercard said the surge reflected a robust economy and early discounts.
The Macy’s and Kohl’s results showed consumers came out in force over the holidays but were choosy in where they actually shopped, according to Neil Saunders, managing director of research firm GlobalData Retail.
“This is further evidence that the rising tide of the economy is not floating all retail boats,” he told The Washington Post, noting that Target, in particular, “pulled out all the stops to create a compelling and engaging holiday experience.”
Target’s comparable sales grew 5.7% in November and December. Ahead of the holidays, the company announced free two-day shipping, with no minimum purchase or membership required, from Nov. 1 to Dec. 22.
Macy’s CEO Jeff Gennette said its holiday season started on a strong note for the retailer, particularly during Black Friday and through the rest of Cyber Week, but sales slowed down in mid-December “and did not return to expected patterns until the week of Christmas.”