Macy's, Best Buy: Tough Retail News; Markets Drop
Macy's and Best Buy this morning released some more sobering retail news, portending a bleak Christmas and a tough-it-out 2009.
Macy's swung to a $44 million loss in the third quarter as sales dropped about 7 percent at the middle-range department store. Macy's is probably suffering the "trade-down effect: "more and more of its customers are buying clothes at Target and Kohl'sto save money.
Best Buy cut its 2009 earnings outlook by about 20 percent, thanks to what the company called the toughest economic climate it has ever seen. In recessionary times, consumers cut back on luxury items, including electronics.
Meanwhile in the first 20 minutes of trading on Wall Street, markets are down across the board as the Street awaits word from Treasury Secretary Hank Paulson, who will update the status of the federal bailout at 10:30 this morning.
The Dow is trading down about 150 points, or about 1.8 percent.
The S&P 500 is down 2 percent and the Nasdaq is down about 1.6 percent.
Macy's is taking some swift reorganizing actions to brace for 2009, moves applauded by analysts. The Cincy-based chain has cut its 2009 capital expenditures budget by half and has dispersed.
The chain continues with consolidations announced earlier this year and said that it is still on track to achieve at least the low range of projected profits for 2009.
At Best Buy, same-store sales in October dropped 7.6 percent compared to October of last year.
-- Frank Ahrens
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November 12, 2008; 9:51 AM ET
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