Kohl's Slumps but Notes Upturn -- WSJ
August 21 2019 - 3:02AM
Dow Jones News
By Suzanne Kapner
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 21, 2019).
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 6.9% on Tuesday and are down 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 PLC.
Total sales fell 3.1% to $4.4 billion for the quarter 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 Michelle Gass said business improved in
the last six weeks of the quarter, with sales at stores open at
least a year rising 1%. She added 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 threat of high costs because of
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 lower lumber prices.
Even retailers that posted higher sales are being judged harshly
by investors. T.J. Maxx parent TJX Cos. said Tuesday that sales at
stores open at least a year rose 2% in the most recent quarter.
That is on top of a 6% increase in the same period a year earlier.
Foot traffic to its stores has increased for 20 consecutive
quarters. Its shares fell slightly to $51.51 on Tuesday.
Analysts are concerned that T.J. Maxx and its sister chain
Marshalls might 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 working with designers to launch exclusive
collections, such as one from Jason Wu that will arrive in stores
for the holiday season. And it is working 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 21, 2019 02:47 ET (06:47 GMT)
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