Holiday Sales Rebound at Macy's and J.C. Penney -- 2nd Update
January 04 2018 - 2:47PM
Dow Jones News
By Suzanne Kapner and Allison Prang
A healthy economy and strong consumer spending gave a boost to
Macy's Inc. and J.C. Penney Co., which reported sales growth for
the critical holiday months.
Macy's said same-store sales rose 1% in November and December
from a year ago, while Penney's increased 3.4%. The results were an
improvement from a year ago when both chains reported declines. The
big mall anchors are the first major retailers to give investors a
readout on the holiday season.
Analysts and economists have predicted that low unemployment and
rising wages gave consumers at all income levels the confidence to
spend this holiday season. Retailers had their best holiday sales
since 2011, according to Mastercard SpendingPulse, which tracks all
forms of payments both in stores and online.
Both Macy's and Penney have struggled with falling sales as
shoppers make fewer trips to malls and do more of their spending on
smartphones. They have responded by closing weaker locations and
ramping up investments in e-commerce.
"Consumers were ready to spend this season, and we delivered
with solid execution," said Macy's CEO Jeff Gennette.
Penney CEO Marvin Ellison said his company's push into home
appliances paid dividends. "We had over 30% growth in appliances,
and we think that market share is coming from Sears," Mr. Ellison
said in an interview
On Thursday, Macy's said it would close 11 stores earlier than
planned this year. They were part of about 100 closures the company
had announced in August 2016. It will also be making staff changes
that will involve downsizing or increasing staff in different
stores.
Mr. Ellison said Penney wasn't planning any significant store
closings this year.
After weak sales last holiday season, Macy's announced plans to
cut 10,000 jobs and Penney unveiled plans to close 138 stores and
offer buyouts to 6,000 workers.
On Thursday, Macy's increased its adjusted earnings guidance for
fiscal year 2017 to be between $3.59 and $3.69 a share given the
effect tax reform will have on the company's yearly tax rate. The
retailer said it expects total sales during the 2017 fiscal year to
fall between 3.6% and 3.9%.
Neil Saunders, a managing director of research firm GlobalData
Retail, said that while Macy's positive results were a welcome
change from the string of declining sales it has been posting, he
cautioned that the retailer's growth is still weak and that it's
likely losing share to other players.
"These results are a step in the right direction, but Macy's has
a very long journey ahead of it before it can declare itself to be
on the path to prosperity," Mr. Saunders wrote in a note to
clients.
Penney said it was reaffirming its previous financial targets,
which include a forecast of fiscal 2017 comparable sales that will
be flat to down 1% from a year ago.
"Consumer confidence is high, unemployment is low and we think
the new tax legislation will benefit our core customers," Mr.
Ellison said. "That should lead to positive sales growth in
2018."
After rallying in recent weeks, the shares of Macy's and Penney
slipped Thursday. Macy's shares were down 3% in early afternoon
trading, while Penney's shares dropped 4.5%.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Allison
Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
January 04, 2018 14:32 ET (19:32 GMT)
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