Price wars and e-commerce investment to weigh on retailer profits, Moody's says

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Intense competition for market share and the cost of integrating e-commerce and stores has driven Moody's to lower the industry's outlook to stable from positive.

Intense competition for market share and the cost of integrating e-commerce with brick-and-mortar stores has driven Moody's Investors Service to lower its outlook for the retail industry to stable from positive.

Moody's operating profit growth forecast for the year to between 2% and 3% from a prior estimate of 5% to 6% growth.Customers look on as a Walmart cashier rings up their purchases at a Walmart store on August 15, 2019 in Richmond, California.Moody's Investors Service is predicting slower growth ahead for retailers, as price wars and big investments weigh on profits.

Intense competition and the cost of integrating e-commerce with brick-and-mortar stores is hurting the industry's performance, Moody's said. It also cut its outlook for the sector to stable from positive. "The competitive landscape is becoming very, very challenging," said Mickey Chadha, a vice president at Moody's."The small guys that are facing a lot more competition, aren't keeping up with the pricing pressure and aren't doing as well."

 

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