Retailers' Sales Sink but Not So Deeply -- WSJ
August 11 2017 - 3:02AM
Dow Jones News
Macy's and Kohl's slow slump in their sales, and Dillard's has
loss; Nordstrom bucks trend
By Suzanne Kapner and Ezequiel Minaya
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 11, 2017).
Macy's Inc. and Kohl's Corp. reported another quarter of
shrinking sales that spooked investors, though the latest declines
weren't as deep as they have been in recent periods.
Kohl's executives pointed to signs of improved demand and
shopper traffic in summer months, and Macy's executives said their
store restructuring and inventory reduction put them on track to
reach their goals for the year.
"I don't want to make too much of one quarter, but it certainly
feels better than it has in a long time," Karen Hoguet, Macy's
finance chief, said in an interview.
Still, the results weren't enough for investors who have soured
on the sector. Shares of Macy's fell 10% and Kohl's dropped 6%
Thursday. Smaller department-store chain Dillard's Inc., which
Thursday surprised analysts by swinging to a loss, tumbled 16%.
After U.S. markets closed, Nordstrom Inc. bucked the downward
trend, reporting higher quarterly revenue and a 1.7% increase in
sales at stores open at least a year. Shares of the upscale
retailer gained 3% in late trading, recouping some of Thursday's
decline.
"Investors want more sustainable evidence of why these
businesses can survive in today's world," said Charles Grom, an
analyst with Gordon Haskett Research Advisors.
Macy's same-store sales, a metric that tracks sales at
established locations that haven't recently opened or closed, fell
2.8% in the second quarter, better than the 5.2% retreat in the
first quarter.
Kohl's same-store sales retreated 0.4% in its latest quarter,
less than the 2.7% decline the previous quarter.
"The improvement in our sales trend was driven entirely by an
improvement in traffic," Kohl's Chief Executive Kevin Mansell said
on a conference call. A notable change came in July, when traffic
turned positive compared with the same month last year.
Kohl's lured new shoppers with the addition of the Under Armour
brand in its stores. That helped its activewear business post a
roughly 15% sales increase in the period compared with a year ago.
Mr. Mansell said Kohl's also sold more goods at full price, while
less inventory resulted in fewer promotions to clear unsold
goods.
Foot traffic has steadily slowed at brick-and-mortar stores as
shoppers increasingly turn to Amazon.com Inc. and e-commerce to
spend their dollars. Same-store sales have declined at both Macy's
and Kohl's for several quarters in a row.
But Craig Johnson, the president of market-research firm
Customer Growth Partners, said the worst may be over for some of
the stronger department stores. "Although it's premature to call a
turn, we believe that the sector has bottomed," Mr. Johnson said,
adding that mall traffic picked up in July just in time for the
back-to-school sell season.
Macy's said business improved throughout the second quarter,
despite a 9% drop in sales to foreign tourists. New strategies,
including revamped shoe and jewelry departments, contributed $60
million in sales during the period. Macy's, which is in the process
of closing 100 stores, said Thursday it expects same-store sales to
decline about 2.5% in the third quarter.
Kohl's CEO said he has no plans to announce mass store closures
this year. "There is an impact on a market when you have fewer
stores," Mr. Mansell said, noting that e-commerce sales tend to
slow in areas where stores have closed. "Everything we've learned
reinforces the importance of a great physical footprint."
Overall for the quarter ended in July, Macy's earned $116
million, up from $11 million a year ago. Revenue decreased 5.4% to
$5.55 billion. Kohl's posted $208 million profit, up from $140
million a year ago. The company's revenue slipped 0.9%% to $4.14
billion.
Michelle Ma contributed to this article.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Ezequiel
Minaya at ezequiel.minaya@wsj.com
(END) Dow Jones Newswires
August 11, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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