This is a tale of changing environments and the organisms that are, as a result, dying off.
First, consider the bricks and mortar retailers. Amazon, the dominant online seller of virtually everything, reports a spectacular quarter with soaring sales and (fairly new for them) strong profits. But in a world of flat consumer spending, where families have already used up their savings, their kids’ college funds and the loose change in their sofas to make ends meet, one store’s feast is necessarily another’s famine. And the physical retailers — which require you to actually go to them in order to buy their stuff — now find the water hole dry and the trees barren of leaves. Here’s what Macy’s reported this morning:
Macy’s results reminiscent of financial crisis
(CNBC) – Macy’s dismal first-quarter results are bringing back unwelcome memories of the financial crisis, as the retailer on Wednesday reported two metrics that harken back to that period of economic malaise.
During the first quarter, the department store chain said its comparable sales fell 5.6 percent. That marks a deceleration from its fourth-quarter same-store sales decline of 4.3 percent, and represents its most severe decrease in this metric since second quarter 2009. During that quarter, Macy’s comparable sales slid 9.5 percent.
Meanwhile, the retailer reported a 36 percent year-over-year drop in operating income. That not only marks its seventh straight quarter of year-over-year declines for this metric, but it is far steeper than any quarter during the Great Recession, said Ken Perkins, president of Retail Metrics. In second quarter 2009, by comparison, the retailer’s operating income fell closer to 10 percent.
It’s hard to see how Macy’s survives in its current form. But it might hang on longer than Italy’s major banks, which are saddled with a profligate and therefore ungovernable home country locked within a currency union managed by Germany for Germany. The result is catastrophic:
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