J.C.Penney (NYSE: JCP) announced earnings which were nothing short of proof that its turnaround is well underway. Its shares dropped 15% . Same store sales rose 6.4% which will probably not be matched by any other large retailer. However, pessimism about Christmas sales based on earnings and forecasts from Macy’s (NYSE: M) and Nordstom (NYSE: JWN). With 39 shopping days until Christmas, Wall St. already believes that major retailers cannot make successful recoveries, because numbers of shoppers have begun collapsing.
The theory about this year’s retailer success is that none of the major companies can pull free of the economy. Early expectations from experts which include the National Retail Federation were that the holiday would be good. The NRF forecast a sales increase of 3.7% to $630.5 billion compared to the same period last year. No one believes that number anymore, unless a retailer sells its products and services entirely online
Even if most of the large retailers open on Thanksgiving, they cannot thwart the fact that people can shop from anywhere, at any time on Amazon (NASDAQ: AMZN). If a shoppers want to buy all their holiday gifts at 1 AM on a Sunday, Amazon is just as accommodating as it is during what bricks and mortar retailers consider normal business hours.
Investors, at least the short term ones, do not care if there is a secular rotation toward online retail. A lack of holiday shoppers is just as important to them as shopper behavior. Only investors who buy and hold stocks for months, or even years, consider the broader implications of why shares in Macy’s and J.C. Penney have been destroyed.
Thirty nine shopping days used to be a long time. Malls either filled up with people, or they didn’t. The success of the holidays could almost be counted by the occupied parking space in mall lots. Too many of those spaces will be open. That is why so few investors believe that 39 days is long enough for any retail recovery, particularly for the sector’s most troubled companies.