Most department stores see sales metric drop
NEW YORK– It’s still a pretty rough time to be a department store.
Macy’s, Kohl’s and Dillard’s all said Thursday that a key sales figure fell again in the latest quarter as customers increasingly shop online, at discount stores and elsewhere. Nordstrom, the outlier, saw those sales rise 1.7 percent overall and even more at its discount Nordstrom Rack unit.
At Macy’s the decrease wasn’t as bad as Wall Street expected, and Kohl’s managed to keep the decline to just 0.4 percent. But Macy’s Inc. shares fell 10 percent, Kohl’s Corp. fell nearly 6 percent and Dillard’s Inc. dropped almost 16 percent after reporting a loss of $17.1 million.
Macy’s has cut jobs and closed some stores, has started an off-price brand, and it plans to launch a loyalty program in October that it hopes will bring more shoppers through its doors. The company is open to more changes: When asked Thursday if Macy’s would consider selling medicine, appliances or other items to make it more of a one-stop shop, CEO Jeff Gennette didn’t say no.
“Macy’s is a very flexible brand,” he said.
Rival J.C Penney, which is scheduled to report results Friday, has brought major appliances to its stores after a long absence — an area that had been a remaining source of strength for Sears.
Macy’s, the nation’s largest department store chain, said sales fell 2.8 percent at established stores during the second quarter, its tenth such decline in a row. But that was better than the 3.3 percent drop that analysts expected, according to FactSet. Kohl’s saw same-store-sales fell 0.4 percent during the quarter. Still, President and CEO Kevin Mansell said foot traffic increased during the quarter. Dillard’s said its sales fell 1 percent at established stores.
At Seattle-based Nordstrom, the flagship Nordstrom unit, which includes online clothing concierge Trunk Club, reported a 1.4 percent increase in sales at established stores. The Nordstrom Rack unit reported a 3.1 percent improvement.
Analysts at Citi said the results from Macy’s were “less bad,” but they added that the company’s sales and gross margins are “still very weak.” At Kohl’s, they saw “better than expected” sales and hints that the back-to-school season had started well.
Department stores are “just not as relevant as they once were,” said Neil Saunders at GlobalData.
Nordstrom, though its second-quarter profit declined 6 percent, lifted the lower end of its outlook, and its shares rose 3 percent in extended trading. The company credited its anniversary sale, which took place during the quarter, and said its own labels did well during the sale. But Nordstrom said that excluding the anniversary sale, the retailer’s sales were consistent with recent trends
Macy’s had warned investors in June that its profit margins would keep shrinking this year. For the quarter ending July 29, the Cincinnati-based company reported net income of $116 million, or 38 cents per share. That’s up from $11 million, or 3 cents per share, a year before.
Adjusted earnings came to 48 cents per share, while revenue fell 5 percent to $5.55 billion. Both those figures beat expectations, according to Zacks.
For the full year, Macy’s expects earnings of $2.90 to $3.15 per share, below the $3.27 per share that analysts expected, according to FactSet.
Kohl’s, which is trying to attract more shoppers by offering more outside brands and cutting some of its in-house clothing lines, saw profit jump 49 percent to $208 million. Revenue fell just under 1 percent to $4.14 billion.
But Dillard’s swung to a loss after reporting a profit in the same period a year earlier, as increased inventory led to big discounts. Analysts surveyed by Zacks Investment Research had expected earnings of 21 cents per share.