Five stocks in the S&P 500 equity index hit their 52-week low price in June, and they are all in the retail sector. The share prices of Nordstrom Inc (NYSE: JWN), Kohls Corp (NYSE: KSS) and Macy’s Inc (NYSE: M) hit their 52-week low price in early June, and are down between 27 to 30% in 2019, making them some of the worst performers this year out the 30-odd stocks in the S&P 500 to hit a 52-week low in June. Other retail names hitting a 52-week low in June, but are down less than Nordstrom, Kohls and Macy’s include Foot Locker Inc. (NYSE: FL) and L-Brands Inc. (NYSE: LB).
Nordstrom is one of the worst performers, with a share price down approximately 30% in 2019. The stock has been particularly hard hit by the weaker than expected 1Q-19 financial results that missed Wall Street analysts’ expectations by more than 46%, according to data from Finscreener.com. Nordstrom reported earnings per diluted share for the first quarter ended May 4, 2019 of $0.23. The company said in its press release, “Total Company net sales decreased 3.5 percent for the first quarter. Three areas impacted the company’s top-line results — loyalty, digital marketing, and merchandise — which contributed to declines across its Full-Price and Off-Price businesses, in both stores and online.”
What seems most distressing in these results is the company’s poor online sales. Traditional US retail has been suffering for years because of competition from online retailers like Amazon.com Inc (NASDAQ: AMZN). Nordstrom acknowledges that it faces challenges in the online space and said in its first-quarter earnings release that it would expand its presence in New York City, its largest market for online sales.
Nordstrom is not the only US retailer that is suffering. Kohls Corp’s share price also hit its 52-week low in June, experiencing a rapid decline in the last two months. The share price closed at over $75 per share in April 2019 and is now down below $47.50 per share in this short period. The rapid sell-off is a bit of a surprise considering 1Q-19 earnings only missed analysts’ expectations by around 9%, according to Finscreener.com.
If recent retail sales data release from the US Census Bureau is any guide, then US retail names could continue to suffer this year. Data released this week showed retail sales in the United States increased 3.20% compared to a year earlier in May of 2019. The result is down sharply compared to the same month in 2018 when retail sales grew at a rate of more than 6% compared to the year earlier.
Bottom Line
Traditional US retailers are under extreme competitive pressure from online competition. June alone saw the share price of three retailers in the S&P 500 equity index reach a 52-week low. Management of these companies like Nordstrom know that the battle is online, yet seem to struggle to stem the money outflow. The clear winners in this race will be the retailers who sort out the online sales problem soonest.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
