Department Stores See Further Fizzle

The season of good cheer is upon us.

Well, that depends on what side of the retail aisle you’re talking about.

In eCommerce? Boom times a plenty, it seems, as double-digit sales growth marked Black Friday into Cyber Monday. And early stats coming into the traditional shopping season seemed to show some continued lift as consumers continue to open their wallets and purses — online at least.

In the real aisles, the tangible, brick-and-mortar kind, there’s decidedly less sizzle going on. That’s especially apparent for department stores, once a mainstay of retail. The pitter patter of shoppers’ feet is muted, the ringing of bells is not exactly deafening at the register.

At a high level, Moody’s Investors Service has estimated that the department store sector will see a steeper, deeper decline in operating income than had been seen by Moody’s even last month. This past week, the service called for an operating income decline of 20 percent, where the forecast had been for a 15 percent decline.

The pessimistic outlook comes as the overall market share garnered by department stores has been on the wane. Inventory is on the rise, which translates into markdowns, which then of course hit operating income.

“Despite a very healthy consumer and heavy spending to improve inventory efficiency and online capabilities, department stores rang up a disappointing third quarter close on the heels of a very bleak first half,” Moody’s analysts led by Christina Boni, VP senior credit officer, said in the report that predicted rough sailing. “The competitive landscape remains extremely promotional, with no let up as we wade further into the all-important holiday season,” according to the report.

To be sure, department stores have been doing what they can to embrace the digital age. But, as shown by the latest results of department store operator Hudson’s Bay Company, discounts hurt.

The company said this past week that, along with lower same store sales, off 1.7 percent in the fiscal third quarter, sales at Saks were off 2.3 percent. The company has seen a pullback in luxury consumers, and the impact of markdowns.

No easy times, then, this holiday season — or beyond — for the department store model.

Sizzle

Bill.com: B2B is the place to be, at least when it comes to IPOs. The FinTech, which helps streamline back office functions of SMBs, saw shares pop 60 percent this week in their debut day of trading.

Cross-Border Payments: Mobile wallets have become prevalent across Africa, and in a bid to make payments truly international, and pan-African, Visa has announced a partnership with FinTech firm MFS Africa.

Electronic Payments: A study released in collaboration by several Federal Reserve Banks shows that card payments are overtaking cash, marked by a boost in debit transactions — and in 24 percent of consumer purchases, electronic devices were the conduits of choice.

Fizzle

SoftBank’s Vision Fund: Takes another hit as Wag, the struggling dog-walking startup, buys back the Vision Fund’s stake — at a loss for the SoftBank fund. This just the latest blow in a series of investments that have gone sour for the Japanese firm (WeWork comes to mind, of course).

Antitrust: Regulatory scrutiny of possible antitrust violations seems to be ramping up, and to Big Tech’s detriment. The Federal Trade Commission is reportedly weighing an injunction against Facebook centered on how its apps are integrated. Separately, the Department of Justice is reportedly gearing up to review Google’s Fitbit acquisition for possible antitrust red flags.

Banking job cuts: In Europe, banks are facing continued uncertainty around Brexit, slowing economic growth and regulatory headwinds. Lenders across Germany, the U.K.,  Switzerland, Spain and France have cut 60,000 positions to slash costs.