M Macys Inc

By Austen Hufford 

Department-store operator Macy's Inc. focused on profit margins in the latest quarter, while Kohl's Corp. sought to drive sales, as the retailers took different tacks in contending with the rise of e-commerce.

Kohl's executives pointed to a strong back-to-school season, leading to surprise growth in same-store sales for its third quarter. Macy's executives, meanwhile, said they saw an increase in gross profit margin, thanks to efforts to control spending on inventory.

Shares of Macy's rose 2.1% in premarket trading as the company beat profit estimates, while Kohl's dropped 8.7% as it missed expectations.

Macy's same-store sales -- a metric that tracks sales at established locations that haven't recently opened or closed -- fell 4% in its third quarter, worse than the 2.8% fall analysts from Consensus Metrix had expected. Kohl's said comparable sales rose 0.1%; analysts from Consensus Matrix had expected a 0.7% fall.

The shift to online shopping has hurt Macy's and its peers, which have responded by closing weaker locations and investing in e-commerce. Macy's has also been expanding its discount outlet brand, Backstage, and recently launched a new customer loyalty program. Kohl's has said it views a large store footprint as important, saying that e-commerce sales slow in areas with fewer stores.

At Macy's, gross margin came in at 39.9%, up from 39.8% in the same quarter last year. At Kohl's, gross margin fell to 36.8% from 37.1%

Macy's posted a 6.1% decline in revenue to $5.28 billion, driven by both fewer stores and the slide in comparable-store sales. It posted a profit of $36 million, or 12 cents a share, compared with a profit of $17 million, or 5 cents a share, in the same quarter last year, helped by the improvement in margins. Adjusted earnings per share came in at 23 cents.

Analysts polled by Thomson Reuters had expected revenue of $5.31 billion and adjusted earnings per share of 19 cents.

Kohl's saw revenue increase 0.1% to $4.33 billion. Profit came in at $117 million, or 70 cents a share, compared with $146 million, or 83 cents a share. Analysts had expected revenue of $4.3 billion and earnings per share of 72 cents.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

November 09, 2017 09:24 ET (14:24 GMT)

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