The so-called Retail Apocalypse continues – or does it? — as shares of JCPenney dropped under $2 for the first time last week after the company forecast a larger-than-expected full-year loss. It also posted lackluster results behind price cuts across product lines.
JCPenney shares fell 26 percent to $1.78 in early trading, the lowest levels since listing on the New York Stock Exchange a week before the beginning of the Great Depression in 1929. Executives said they expected a loss of between $1 per share and 80 cents per share, much bigger than its previously estimated loss of between 7 cents and 13 cents.
“We took necessary actions to mark down and clear excessive inventory positions across many of our categories, which encompasses more than just seasonal product or fashion misses,” chief financial officer Jeffrey Davis, told the New York post. “We will continue to take actions to right-size our inventory.”
But not everyone is ready for the retail version of the End of Days.
“In the wake of highly publicized bankruptcies, store closings, and layoffs from some of America’s largest retailers, publications like The Atlantic and Bloomberg Businessweek have published recent stories on the “retail apocalypse,” noted the Direct Selling Association recently. “However, a widespread “retail apocalypse” is an exaggeration to say the least. While many retailers have experienced challenges, the overall retail sales in the U.S. grew 4.5 percent, representing a 1.7 percentage point increase in growth from the prior year. And last year’s retail growth outpaces U.S. GDP’s 4.1 percent growth rate.”
The U.S. retail sector is rapidly evolving and is as strong, if not stronger, than ever, the group points out, and, a strong overall retail sector and labor market pose favorable macro-economic conditions for direct selling to thrive.
“Despite a 1.8 percent decline in estimated retail direct sales in the U.S. in 2017 and a decline in people involved, there are many promising opportunities to return to growth,” the association notes. “To do this direct selling must play to its key strengths, capitalize on its key differentiators, and quickly learn from innovative retail leaders outside of direct selling.”
The Motley Fool has a slightly different take on the apocalypse that may not be happening.
“While the so-called retail apocalypse looks like a collapse of brick-and-mortar chains driven by online retailers, that’s not actually what’s happening,” the news site suggests. “The companies that have gone bankrupt, struggled, or are teetering on the edge are largely the brands that have not embraced omnichannel retail… Certainly, the current market has been an apocalypse for some chains, but the annual State of Retailing Online study from the National Retail Federation (NRF) and Forrester shows that consumers aren’t abandoning retail. Instead, they expect traditional and digital retailing to be intertwined.”
By: George Mixon