While department stores are still struggling to find their way through the omnichannel jungle, Macy’s just released better-than-expected numbers, citing its revamped marketing approach and a greater focus on fashion.
JC Penney, on the other hand, reports soft results, a sign that it still hasn’t regained its appeal for Middle America. And industry observers seem doubtful that either brand can pull off strong holiday results.
Sales at Macy’s slipped 1.1% in the second quarter to $5.57 billion, from $5.64 billion in the comparable period of the prior year. Operating income climbed to $303 million, up from $282 million. Both exceeded industry forecasts.
In a conference call discussing the results, Macy’s CEO Jeff Gennette chalked the improved results up, in part, to a strong start to the back-to-school season and positive consumer reaction to its new “Time to Shine” ad campaign.
“We are still only early in our journey, but as I look at the progress we’ve made, on merchandising, our strategic initiatives, the re-engineering of our marketing machine, and our company culture, I feel good about the work that’s underway and optimistic about Macy's Inc.'s future,” he said on the call, as reported by Seeking Alpha.
The Cincinnati-based company raised its forecast for the full year.
But analysts were underwhelmed by the numbers.
“We believe today's results, though solid, are not enough to change negative investor sentiment as many retailers face tough second half comparisons,” writes Paul Trussell, an analyst who follows Macy’s for Deutsche Bank. “While we commend management on delivering solid improvement, we believe valuation had become stretched.”
Results from J. C. Penney, still leaderless following the defection of its CEO to Lowe’s back in May, are more downbeat. The Plano, Tex.-based chain says net sales for the second quarter sank 7.5% to $2.76 billion, compared to $2.99 billion in the year-ago period, primarily due to the 141 stores it closed recently. On a comparable-store basis, sales inched up 0.3%. And its net loss increased to $120 million, compared to a loss of $23 million a year ago.
“Overall, we remain somber about JCP,” writes Neil Saunders, managing director of GlobalData Retail, in his commentary about the results. Apparel is especially problematic, and “remains unfocused and unsure about its strategy,” he writes.
“Indeed, the company has changed direction several times, first trying to attract younger shoppers, then younger moms, and now back to older shoppers. In our view, this flailing around is a symptom of a wider problem in that JC Penney no longer has a sense of what it wants to be and who it wants to serve... it fails to inspire anyone.”