What's going on?

From Tesco to Marks & Spencer (M&S), Kohl�s to L Brands, the holiday season didn�t go so well � and their updates didn�t go as planned.

What does this mean?

On Thursday, department store chain Kohl�s and Victoria’s Secret parent L Brands reported worse-than-expected sales growth over the holidays, leading both to lower their profit forecasts for the year. Bed Bath & Beyond (BB&Y) couldn�t escape the malaise either: it reported weak results and jettisoned its earlier profit prediction late on Wednesday.

But the #retailfail extended beyond American shores. UK chain M&S saw a worse-than-expected decline in holiday sales, while grocer Tesco�s barely grew. The latter in particular will have hurt investors: Tesco represents 1% of the UK�s stock market and is globally significant too, with businesses across Europe and (for now) Asia.

Why should I care?

Zooming in: Costs, costs, everywhere.
Investors tend to focus on retailers� sales growth because it�s the best indication of a company�s profitability. Since traditional retailers have high fixed costs � rent, electricity, store staff and so on � rising sales tend to boost profit directly. That does, however, make cutting costs more difficult, which means falling sales have a significant negative effect on profit. And that�s to say nothing of the additional warehousing costs that ecommerce wannabes take on�

For markets: Investors don�t pull any punches.
Investors added insult to injury by selling retailers� shares: Kohl�s fell 9%, BB&Y 18%, and M&S 10%. There’s perhaps only one winner: Amazon. Investors in the ecommerce giant will be hoping its record holiday season � perhaps partly thanks to last year�s record US shopping mall vacancies � translates into a strong fourth-quarter earnings report later this month. And with more flexible costs than traditional retailers, it very well might.