s of Nordstrom, Kohl’s, Dilliard’s, and J.C. Penney tanked on Wednesday after Macy’s lowered its profit outlook in an earnings miss that was indicative of challenges within the broader department store and retail sector.
Macy’s stock sank more than 17%, while Nordstrom and Kohl’s fell more than 9% after the news. s of Dilliard’s and J.C. Penney sank more than 5%. Macy’s and Nordstrom both hit new 52-week lows on Wednesday morning.
The decline in retail stocks happened against the backdrop of a broader market selloff with the Dow Jones Industrial Average slipping more than 450 points at the open. The plunge in stocks was sparked by investor worries about the U.S. economy.
In its earnings report, Macy’s said excess inventory during the spring season forced the company to cut prices in order to move merchandise, which weighed on profits. The company is now expecting to earn between $2.85 and $3.05 a this fiscal year, down from a range of $3.05 to $3.25.
The industry as a whole has been under pressure, as annual sales at U.S department stores fell 20% from 2017 to 2018 and are on pace to drop even further this year, according to the U.S. Census Bureau.
More and more shoppers are steering clear of shopping malls and instead turning to online clothing platforms like Stitch Fix, Net-a-Porter and Gilt to shop. Department stores are also struggling as more of the brands that sell within their stores, like Nike and Coach, are investing in selling as much directly to consumers as they can.
–CNBC’s Lauren Thomas contributed to this report.