US retail stocks drop after Black Friday disappoints Wall Street

Retail stores display "Black Friday" advertisements and banners on Oxford Street in central London, as the annual retail event takes place on Nov 27, 2015.
Retail stores display "Black Friday" advertisements and banners on Oxford Street in central London, as the annual retail event takes place on Nov 27, 2015.PHOTO: AFP

SAN FRANCISCO (Reuters) - Shares of beleaguered retailers dropped on Monday (Nov 30) after holiday shopping at brick-and-mortar stores got off to a lackluster start on Thanksgiving and Black Friday.

Department stores whose share prices had already declined recently, due to low expectations going into the last two months of 2015, fell further.

Shares of Macy's Inc were down 2.7 per cent at $38.90 on Monday afternoon. Nordstrom Inc shares were down 2.2 per cent at $56.33, Kohl's Corp stock was down 3 per cent at $46.64 and Wal-Mart Stores Inc shares were down 1.4 per cent at $59.04.

For the year, Macy's stock has now plummeted 41 per cent while Nordstrom is down 24 per cent, reflecting a consumer shift away from discretionary items like designer-label clothes and cosmetics and toward online spending and merchandise including smartphones, televisions and home goods.

More than 80 per cent of the stocks in the S&P retail index were down. Gainers included Best Buy, which was up 0.8 per cent at $31.72, and Priceline Group, up 0.6 per cent at $1,252.13.

Even online shopping heavyweight Amazon.com Inc, which should benefit from the Internet shopping trend, was down 0.4 per cent at $670.38.

"In the short term, players are saying 'Hey, this is not what I positioned myself for,'" said Frank Davis, director of sales and trading at LEK Securities in New York. "They thought maybe we'd get a bit of a pop, but that hasn't happened."

Data from analytics firm RetailNext showed retail sales for Thursday and Friday fell 1.5 per cent on flat customer traffic, while average spending per shopper dropped 1.4 per cent. Online sales were up by double digits.

Deutsche Bank said that 46 per cent of stores it polled were busy on Friday and Saturday, down from 60 per cent last year and the lowest result of its survey since 2009.

The website of discount retailer Target Corp went down due to heavy traffic on Cyber Monday and the company's stock was down 1 per cent at $72.71.

As much as 20 percent of holiday shopping was expected to be done over the Thanksgiving weekend this year, analysts said. But the four days are not considered a strong indicator for the entire season.

Since 2008, early sales estimates following Black Friday and Cyber Monday have had little or no bearing on retail stock performance for the holiday quarter, according to a report by LPL Financial.

The short-term performance of stocks in the week after Thanksgiving has also been similarly inconsistent.