Friday, February 10, 2017

Moody's revises US department store operating income forecast following poor holiday sales

A less than stellar holiday season for US department stores has led Moody's Investors Service to revise its forecasts for the sector's operating income, the rating agency says in a new report. Moody's now expects 2016 aggregate operating income to decline 18%, rather than 11%, and for sales to also decline in the year ahead.

"Prior to the 2016 holiday shopping season, it looked as if department stores could get back on track after a tough year," said Moody's analyst Christina Boni. "But leaner inventory levels and other efforts to boost earnings don't appear to be sufficient, and as a result we have lowered our 2016 forecast and become more cautious on 2017."

Most major chains, including Macy's, Kohl's and JC Penney, rang up negative comparable sales in the final three months of last year, Boni says in "Department Stores - US: Sector Must Accelerate Revamp in 2017 Following Grim Holiday." Moody's previous earnings expectations reflected companies' efforts to better manage inventory and grow online sales. Shoppers, however, have continued to leave department stores for fast fashion, off-price and e-commerce options as they prioritize value and convenience. . . . more

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