For a while on Tuesday it looked like the bulls might fight their way into the black, overcoming Monday’s lethargy. When push came to shove as the closing bell approached though, it was the bears doing all of the pushing and shoving.
It could have been worse though … you could have owned Macy’s Inc (NYSE:M), Dollar General Corp. (NYSE:DG) and Fastenal Company (NASDAQ:FAST). These three names were among the day’s biggest losers, albeit for understandable reasons.
Fastenal Company (FAST)
In the grand scheme of things, the news from industrial fastener company Fastenal wasn’t terrible. But, in the current market environment, anything less than impressive is a problem for FAST investors … and all investors for that matter.
On Tuesday morning, Fastenal Company reported daily sales in May were up 9.5% in the United States, and up 9.7% globally. Problem is, analysts were calling for a growth pace of about 10%. May’s figure also suggests the rate of growth is slowing down on a sequential basis.
FAST ended the day down 5.7%.
Dollar General Corp. (DG)
Discount retailer Dollar General lost 3.8% of its value today, though it was in good company. Dollar Tree, Inc. (NASDAQ:DLTR) was off 3%, and Wal-Mart Stores Inc (NYSE:WMT) fell 1.7%. They were all down for the same underlying reason though; DG just led the way.
That underlying reason was news that Amazon.com, Inc. (NASDAQ:AMZN) was lowering its price for Prime membership to people receiving some sort of government assistance. Rather than the normal rate of $10.99 per month, those members will only pay $5.99 per month, but still receive all the normal benefits (like free shipping) of Prime.
The e-commerce giant’s move also dovetails nicely with something it has been working on since earlier this year … accepting Supplemental Nutrition Assistance Program, or SNAP, funding payments for eligible food purchased through its website.
The developments take dead aim at a huge sliver of Wal-Mart’s, Dollar General’s and Dollar Tree’s customer base. It’s estimated that more than 20% of Wal-Mart’s customers receive some sort of public-assistance for food, though DG investors clearly thought Dollar General was even more jeopardized by Amazon’s announcement.
Macy’s Inc (M)
Finally, as a not-so-gentle reminder that (most) retailers are fighting a losing battle, upper-middle shopping venue Macy’s cautioned its investors on Tuesday.
The blow was dealt on Tuesday morning at an analyst event. CFO Karen Hoguet warned that the current quarter’s gross margin rate could be down 100 basis points on a year-over-year basis. They won’t get much better soon either. For all of 2017, Hoguet is looking for a 60 to 80 basis point drop in the retailer’s gross margin rate.
GlobalData Retail managing director Neil Saunders commented:
“I think this is proof that while Macy’s talks a good game, on the ground very little has changed in stores. It isn’t really a surprise but it is slightly disappointing because the company has been doing some things to try and turn itself around.”
Macy’s shareholders agreed, sending M lower to the tune of 8.3%, and to new multi-year lows as a result.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.