11 January 2016 by lberuti
We recently mentioned retailers as a sector under stress on both side of the Atlantic. Among them, department stores have been under pressure for a while. Shoppers now seem to favour stores that sell similar brands at deep discount and buy on-line. Their risk premia have massively underperformed the credit market over the last 9 months, and so have their stocks compared to the broader equity market. So much so that some are exploring new avenues. SHLD ( Sears ) has been selling off stores. M ( Macy’s Inc ) is talking with real estate developers to take over space in its flagship locations and other stores. According to press report published over the week-end, KSS ( Kohl’s Corporation ) would be debating whether going private could be an option. That certainly put a floor under its equity, but it only added to its debt holders’ woes. Its 5 year CDS shot up 53bps to 215bps.