Home Consumer Macy’s Sounds a Holiday Alarm, and Retailers Brace for Heavy Discounting

Macy’s Sounds a Holiday Alarm, and Retailers Brace for Heavy Discounting

Macy's Herald Square (NY) 2010 (en.wikipedia.org)

By When Macy’s, a store closely associated with Christmas, says there is trouble brewing ahead of the holidays, it is enough to send the world of shopping into a tailspin.

The retailer of “Miracle on 34th Street” warned Wednesday that its stores were awash with merchandise after a sluggish fall season and that slow business would force it to go all-out on discounts during the holidays.

Macy’s shares plunged about 14 percent, dragging other retailers down, too. The Hudson’s Bay Company, which owns Saks Fifth Avenue and Lord & Taylor, fell 5 percent, as did Kohl’s. Burlington Stores fell about 7 percent.

“We’re clearly disappointed,” Terry J. Lundgren, Macy’s chief executive, said in a call with investors. “We believe the retail industry is going through a tough period. We seem to experience something like this every five to seven years or so.”

Faith Based Events

Aggressive discounting from one of the country’s biggest merchants is bad news for retailers this holiday sales season, which is shaping up to be highly discount-driven. It also raises questions about the strength of the economic recovery, and of consumer sentiment.

But a shift in the way Americans shop because of the proliferation of e-commerce, and the power to compare prices at a click of the mouse, has meant that a brightening economy is no longer a tide that raises all retailers, said Oliver Chen, a retail analyst at Cowen.

“The only tide that’s raising all ships is online and mobile,” Mr. Chen said.