Home Depot issues limited customer guidelines, Macy’s is set to drop from S&P 500
Retail giants Home Depot and Costco announced a limit in the amount of customers permitted in stores, and Macy’s will become a small cap business. Yahoo Finance’s On The Move panel breaks down the latest in retail.
Video Transcript
- We're going to turn our attention back here to what's happening to retailers. And it's quite dramatic-- Macy's shares off, what, more than 70% this year. And now, word from the S&P Dow Jones Indices that they're going to remove Macy's from the S&P 500 because the stock has dropped so much in value. And its market cap has fallen as well.
Want to bring in the team to discuss this. And Julie Hyman, we've had different analysts come on to talk about what's happening to retail. The question, though, is how do they recover from this?
JULIE HYMAN: Well, probably some of them don't, or don't as well right, because as we've talked about from the very beginning of this, it's the companies that are the most vulnerable that are then going to have the most trouble coming out of this. Macy's, as we know, was struggling quite a bit going into this crisis, with flagging sales, with getting its e-commerce strategy [? right. ?] Although, it had shown some positive signs in more recent quarters.
And the other thing to note, as we also have often talked about, is that retailers, if they are indeed going to go away, they typically take a long time to do so. Look at JCPenney, for example. The question is whether this will hasten that, or we'll still just see a long decline. Macy's still has a lot of stores, still has a lot of sales, so the question is, when we open back up-- both Macy's and everything else-- will we see a lot of traffic coming back?
- I want to turn this to Julia La Roche, because you're in touch with some of the-- I'm going to use the word successful retailers. I know you have a strong relationship with Walmart. What changes are the retailers you talk to making to get through the crisis?
JULIA LA ROCHE: Adam, I just wonder-- I've been thinking about this a lot-- are our habits that we're forming right now-- are they going to become sticky? In other words, you're talking about-- look at Walmart, for example. You can make the case they're absolutely essential, because they're the largest grocery store, but the way in which customers can shop at Walmart, they have been prepared for this-- not exactly this scenario, but they kind of have an advantage here, meaning the way you could shop.
You can buy online, pick up in store. You can order online, pick up basically from the parking lot. You can go in store. It's this omnichannel way of shopping that might become even more and more sticky. You can make a case that, for example this whole online grocery pickup from Walmart is just going to be that much more sticky, because you're bringing on new customers that maybe didn't shop that way in the first place.
You can make a case for the department stores separately that they were already having issues even before the coronavirus took place. I guess the question here is-- going back to Julie's point-- will some make it? Maybe not. I don't know.
- In the case of JCPenney, they've got over $2 billion of debt that's coming due in the next year and a half that they've got to refinance. But then you look at the retailers who we suspect would get through this crisis-- for instance, Costco and Home Depot. Home Depot, for instance, is going to limit its store hours. Now they're cutting back on hours. Presumably, that'll be just as we get through the first couple of months of this coronavirus crisis. But Julie, when do you think Costco or Home Depot can say, let's get back to the normal way we used to shop.
JULIE HYMAN: When the doctors say-- give the all clear, right? But I think also, those retailers that you mentioned, Home Depot or Costco, they're also making changes in terms of spacing. They have people waiting in line 6 feet from one another. I believe Walmart's instituted one-way aisles, so you have a flow of traffic where you're not passing by people.
And I think the human psychology of feeling uncomfortable in close quarters with other people, that could persist for a little while. So even though the medical community might say, OK, it is safe, human psychology, as we know, is a tricky thing. That's difficult to predict.
