Retail sales have plummetted this year as a result of consumers starting to save and pay down their debts. I thought it would be interesting to take a look at the four retailers that I feel have suffered the most: Macy’s (M), J.C. Penney’s (JCP), Kohl’s (KSS), and Nordstrom’s (JWN). The following picture is a comparison chart of their stock prices.
Needless to say, the stock prices of these four have suffered huge declines in the past two years.
Also, each of these four retailers have bond issues. As you can see from the spreadsheet I put together, the yields (YTM) on many of the issues are in the double digits and nearly all are trading substantially under par. With some due diligence, an investor might find that one or several of these debt issues offer substantial value.
One particular issue that might be of interest is the Federated Dept Stores issue that matures on 4/1/2029 (Macy’s was formerly Federated Dept. Stores). It’s trading at 51 and is currently yielding 14.4%. Macy’s has a long history and is a well-recognized brand. It celebrated its 150th year of business this year. On these facts alone, it seems that chances are fair that Macy’s will be able to make its debt payments. However, this is simply a starting point for more detailed research. Macy’s might go BK next year, which is why an investor must do the due diligence.
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