After disappointing holiday sales numbers from Kohl’s and Ralph Lauren, investors sold their stocks, afraid of worse numbers ahead. This move resulted in a drop in stocks from other similar companies. Ralph Lauren’s stock fell about 18 percent to their lowest in five years, and Kohl’s fell 20 for a seven year low.
Kohl’s blames the lack of profits on the fact that they discounted their winter gear heavily in response to low sales. A slow beginning to the winter kept people from buying cold weather clothing.
Ralph Lauren has also reported low sales in winter clothing and will try to discount their winter inventory enough to get rid of it. Retailers are worried that even a big discount won’t move the cold weather inventory so they’ll be forced to write it off.
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The slow winter season has affected even Target, Macy’s and JC Penney, as their stocks have gone down at least three percent. Most retailers depend on November and December to make up for the rest of the year, making up to 40 percent of their annual sales in that period of time.
Everyone is concerned about overall sales, especially since the decline in global sales, the lapse in holiday spending, and the drop in oil prices. Sales across the United States in the holiday season only increased three percent, less than expected.
Sales at Kohl’s in the fourth quarter were supposed to rise 1.2 percent but only rose 0.4 percent. Ralph Lauren, on the other hand, was supposed to go down 2.7 percent but dropped 7 percent.
Because of rising temperatures in February, inventory levels are expected to be high as they don’t expect a rush on sales, putting pressure on first-quarter sales.
While Kohl’s expected their 2015 earnings to clear at least $4.40 per share, they reported estimated earnings at $3.95 to $4.00. Ralph Lauren expected sales to stay flat, but now believe sales will go down in 2016.