Macy’s shares hit historic low
Business Courier of Cincinnati
Shares of Macy’s Inc. dropped by more than 10 percent in Wednesday afternoon trading on continued projections that holiday spending will hit its lowest rate in decades, before rising somewhat at the close.
Shares in the Cincinnati-based parent of Macy’s and Bloomingdale’s (NYSE: M) hit $5.45 in early afternoon trading, the lowest point since the department store chain emerged from Chapter 11 bankruptcy protection in 1992. Shares closed Wednesday at $5.68, down 7 percent.
Other retailers' stocks also struggled Wednesday. Shares of Saks (NYSE: SKS) were down almost 15 percent before closing down 5 percent, at $3.12. Shares in Dillard's Inc. (NYSE: DDS) declined by 3 percent to close at $3.14, and shares of Nordstrom Inc. (NYSE: JWN) slipped by 13 percent, closing at $8.98.
Consumers, spooked by the financial bailout and massive layoffs, have sharply pulled back on holiday spending. According to a Nov. 17 survey by the National Retail Federation and BIGresearch, 72 percent of consumers have completed less than 10 percent of their shopping, compared with 2.2 percent of shoppers who say they have completely finished.
Retailers have been responding with actions that indicate an even tougher 2009 is expected. On Nov. 18, Saks Inc., owner of Saks Fifth Avenue, said it will cut its 2009 capital expenditures by 40 percent, to $75 million from $125 million in 2008. This followed a similar announcement by Macy’s on Nov. 12, that it will cut its 2009 capital spending to $550 million to $600 million, from about $1 billion. That compares with roughly $950 million in 2008.
Most of the cutbacks at Macy’s will involve technology, maintenance that does not have to be done right away and remodels that are not strategically critical, the company has said.
If finances improve, the retailer said it may add back to the plan.
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