rev up for the holidays ahead, both Kohl’s and Macy’s released mixed results and, despite making progress in their marketing initiatives, disappointed expectations. Those reports, which
come a few weeks after J.C. Penney warned it is losing twice as much this quarter as initially expected, signal rough sledding for mid-tier department stores in the weeks ahead.
Kohl’s, which managed to surprise observers by eking out a 0.1% gain in comparable store sales, says total sales also rose 0.1% to $4.33 billion, up from $4.32 billion in the same period a year ago. But net income dropped 20% to $117 million, below forecasts. The Menomonee Falls, Wisc.-based chain blames disruptions from hurricanes and other unseasonal weather patterns, which offset its solid back-to-school sales. Those results, it says, gained in the low-single digits.
At Macy’s, third-quarter sales dropped 6.1% to $5.28 billion, from $5.63 billion in the same period a year ago, below analyst expectations. On a same-store basis, sales slid 4%. Its profits, though, came in better: Operating income decreased to $121 million from $176 million in the same period a year ago.
While the results show the Cincinnati-based retailer is making headway in its turnaround plans, Macy's “lacks a unified vision for the future of the business,” writes Neil Saunders, managing director of GlobalData Retail, in his report on the quarterly numbers. “On the ground, this means it is hard for shoppers to see any material change, which is one of the reasons why Macy's continues to suffer from customer defections.”
And while he sees significant progress in Kohl’s results from a new mix of products, including its Under Armour line and new Amazon Smart Home Experience in 10 stores, its tiny gain in same-store sales shows “that Kohl's is having to run faster just to stand still. Given that the tides of consumer behavior and the growing importance of digital are both firmly against Kohl's, this is hardly surprising. However, such a position necessitates more radical thinking than just adding new products and services.”
J.C. Penney, which is expected to announce its results Nov. 10, warned that its liquidation of inventory, much of it in women’s apparel, would result in losses twice as large as initially forecast. Calling it a “comprehensive reset,” the Plano, Tex.-based store also unveiled “The JCPenney Holiday Challenge,” a marketing campaign that encourages customers to make a game out of finding bargains at the store.