Department-Store Woes Catch Up to Kohl's
August 20 2019 - 12:57PM
Dow Jones News
By Suzanne Kapner
Kohl's Corp. on Tuesday reported its third consecutive decline
in quarterly sales, though it said business improved toward the end
of the period and it maintained its guidance for the year.
The results prompted concern by analysts and investors that the
strong growth Kohl's had posted for most of last year, which had
helped it buck a downward trend among department stores, has come
to an end. The shares fell 5% by midday and are down about 43% over
the past year.
"There can be no doubt that Kohl's has been blown off course,"
said Neil Saunders, a managing director with GlobalData Retail.
Total sales fell 3.1% to $4.4 billion for the period ended Aug.
3. Sales at stores open at least a year fell 2.9%
Net income dropped to $247 million from $292 million a year
earlier on higher online shipping costs and steeper promotions to
clear unsold goods.
Kohl's Chief Executive Officer Michelle Gass said business
improved in the last six weeks of the quarter with sales at stores
open at least a year growing by 1%. She noted that the positive
sales trend continued into August as the company got off to a
strong start for the back-to-school season.
Other department stores, including Macy's Inc. and J.C. Penney
Co., reported disappointing results last week for their summer
quarter, sending their shares lower. Walmart Inc. was one of the
few standouts, continuing its string of strong growth.
Retailers are facing the added threat of high costs due to
increased tariffs on goods imported from China. On Tuesday, Home
Depot Inc. lowered its sales forecast for the current year, citing
the potential impact of tariffs as well as higher raw-material
costs.
Even retailers that posted higher sales are being judged harshly
by investors. T.J. Maxx parent TJX Cos. on Tuesday said sales at
stores open at least a year grew 2% in the recent period. That is
on top of a 6% increase in the same period a year ago. Foot traffic
to its stores has increased for 20 consecutive quarters.
Yet its shares fell 1.4% in midday trading to $50.81.
Analysts are concerned that T.J. Maxx and its sister chain
Marshalls may be facing more competition as department stores offer
deeper discounts and resale sites such as The RealReal Inc. and
thredUP Inc. gain popularity.
Mr. Saunders of GlobalData said the above-average levels of
discounting across many apparel retailers "gave those shoppers
looking for bargains more choice and more reason to shop around,
something that had a tangible impact on both T.J. Maxx and
Marshalls."
Kohl's has been trying to combat sluggish sales with initiatives
such as one that lets shoppers return items they bought on
Amazon.com Inc. to any of its more than 1,100 stores -- no box
required.
Ms. Gass said the Amazon returns partnership is bringing both
new and existing customers into Kohl's stores, particularly at
off-peak times. She said the venture is expected to be a profitable
one for Kohl's.
The retailer is also partnering with designers to launch
exclusive collections, such as one from Jason Wu that will arrive
in stores for the holiday season. And it is partnering with
Facebook Inc. to find emerging digital brands to showcase in its
stores.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
August 20, 2019 12:42 ET (16:42 GMT)
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