NEW YORK: Holiday shopping reports released Thursday underscored anew the challenges US retailers face in the Amazon era — even if consumers are willing to open their wallets to spend.
The updates were a mixed bag overall, with several retailers reporting small or moderate increases in comparable store sales during the critical November-December period.
But a report from Macy’s aroused the most angst on Wall Street, after the chain slashed its profit forecast even as it signaled a modest increase in sales.
Shares in Macy’s plunged almost 20 percent, while nearly every major retailer was pulled down as well.
That included companies like Target that reported higher holiday sales and confirmed — but did not raise — profit forecasts.
The results were an ugly finale to a holiday shopping season that opened with high expectations owing to robust consumer confidence amid a strong employment market, relatively low gasoline prices and a boost from tax cuts.
Mastercard SpendingPulse in December estimated holiday sales growth of around 5.1 percent to more than $850 billion, the strongest jump in the last six years.
By that estimate, the 2018 holiday shopping season was a strong one — just not for retailers.
“It was a good season. Consumers had more money to spend. They spent it,” said retail industry consultant Dana Telsey.
“But the cost of doing business is getting higher.”
Traditional brick-and-mortar retailers have invested in heavily beefing up their online platforms and offering incentives to lure buyers, such as free shipping during the peak holiday season.
At the same time, these companies also have spent heavily to improve the in-store experience, hiring consultants to help beautify the surroundings and in many cases employing more workers during the peak festive season.
The latest results suggested retailers still have not found a winning recipe for the transition to the e-commerce era.
“We know expenses are always a problem as more and more stuff moves online because people simply will not pay for you shipping it to them,” said retail industry consultant Jan Rogers Kniffen.
“They want it to be the same price in the store in my door. That’s just the way it is.”
Experts say the retail industry is still undergoing an existential shakeout.
Companies like Macy’s, JC Penney and Gap have shuttered stores in recent years, while Toys “R” Us went out of business — a fate that could soon befall iconic American retailer Sears.
Macy’s shares tumbled 18.7 percent after it reported an increase of 1.1 percent in comparable sales, but lowered its annual earnings forecast to a range of $3.95 to $4.00 a share from $4.10 to $4.30.
Sales were dented by a fire in a distribution center in West Virginia and a pre-Christmas “earn and redeem” promotional event that was unsuccessful, Macy’s said.
“The holiday season began strong,” Macy’s Chief Executive Jeff Gennette said, “but weakened in the mid-December period and did not return to expected patterns until the week of Christmas.”
Target said comparable sales grew 5.7 percent over the holiday, while Kohl’s put sales growth at 1.2 percent. L Brands, the parent of Victoria’s Secret, reported flat comparable sales for the five weeks ending January 5.
Bookseller Barnes & Noble estimated sales growth at 1.3 percent over the two-month period, adding that its earnings guidance “may be reduced by as much as 10 percent” due to increased advertising and promotional costs.
Analysts said the declines were exacerbated by expectations that earnings growth will be tough in 2019 after a strong 2018 following the US tax cut enacted in late 2017.
Increased costs bite US retailers despite higher holiday sales
Increased costs bite US retailers despite higher holiday sales
- Mastercard SpendingPulse in December estimated holiday sales growth of around 5.1 percent to more than $850 billion, the strongest jump in the last six years
- The 2018 holiday shopping season was a strong one — just not for retailers
Saudi ports brace for cargo surge as shipping lines reroute
RIYADH: Preliminary estimates suggest that several global shipping lines could reroute part of their operations to Saudi Arabia’s Red Sea ports, potentially adding 250,000 containers and 70,000 vehicles per month, according to Rayan Qutub, head of the Logistics Council at the Jeddah Chamber of Commerce, in an interview with Al-Eqtisadiah.
“Any disruption in the Strait of Hormuz not only affects maritime traffic in the Arabian Gulf but could also reshape global trade routes,” Qutub said, highlighting the strait’s status as one of the world’s most critical maritime chokepoints for energy and goods transport.
With rising regional tensions, international shipping companies are reassessing their routes, adjusting shipping lines, or exploring alternative sea lanes. This signals that the current challenges extend beyond the Arabian Gulf, impacting the global supply chain as a whole.
Limited impact on US, European shipments
The effects of these developments will not be uniform across trade routes. Qutub noted that goods from China and India, which rely heavily on routes through the Arabian Gulf, are most vulnerable to disruption. In contrast, shipments from Europe and the US typically traverse western maritime routes via the Suez Canal and the Red Sea, making them less susceptible to regional disturbances.
Saudi Arabia’s strategic location, he emphasized, strengthens the resilience of regional trade. The Kingdom operates an integrated network of Red Sea ports — including Jeddah, Rabigh, Yanbu, and Neom — that have benefited from substantial infrastructure upgrades and technological enhancements in recent years, boosting their capacity to absorb increased cargo volumes.
Red Sea bookings
Several major carriers, including MSC, CMA CGM, and Maersk, have already opened bookings to Saudi Red Sea ports, signaling a shift in operational focus to these strategically positioned hubs.
However, Qutub warned that rerouted shipments could increase sailing times. Cargo from Asia, which normally takes 30-45 days, might now require longer voyages via the Cape of Good Hope and the Mediterranean, potentially extending transit to 60-75 days in some cases.
These changes are also reflected in rising shipping costs, driven by longer routes, higher fuel consumption, and increased insurance premiums — a typical response when global trade patterns shift due to geopolitical pressures.
Qutub emphasized that Saudi Arabia’s transport and logistics sector is managing these developments through coordinated government oversight. The Ministry of Transport and Logistics, the Logistics National Committee, and the Logistics Partnership Council recently convened to evaluate the impact on trade and supply chains. Regular weekly meetings have been established to monitor developments and implement solutions to safeguard the stability of supplies and continuity of trade.
He noted that the Kingdom’s logistical readiness is the result of long-term strategic investments, encompassing ports, airports, road networks, rail systems, and logistics zones. Today, Saudi logistics integrates maritime, land, rail, and air transport, enabling a resilient response to global disruptions.
Qutub also highlighted the need for the private sector to continuously review logistics and crisis management strategies, develop alternative plans, and manage strategic stockpiles. Such measures are essential to mitigate temporary fluctuations in global trade and ensure smooth supply chain operations.
