DISCUSSION
Are department stores seeing the Ghost of Christmas Future in bleak holiday results?
Written by George Anderson
Source: Publix
The spirit of Christmas present was not too kind to department stores during the 2018 holiday season as earnings reports from J.C. Penney, Kohl’s and Macy’s (never mind the bah-humbugging mess that is Sears) point out.
All three chains reported results that were not only below the expectations of Wall Street analysts but well below the growth rate forecast for the retail industry as a whole over the last two months of the year.
Penney’s results were the worst of the three as it reported a 5.4 percent drop in same-store sales for the nine weeks ending Jan. 5, just one year after delivering a 3.4 percent gain in comps for the holidays. As discussed on RetailWire yesterday, Penney’s new CEO, Jill Soltau, faces a myriad of challenges as she attempts to make the chain relevant again while coming up with financial strategies that will pay down the company’s roughly $4 billion debt.
Kohl's, whose CEO, Michelle Gass, told The Wall Street Journal in an interview that she doesn’t think of her company as a department store, posted a 1.2 percent increase in same-store sales for November and December, compared to a 6.9 percent jump a year earlier.
A concern for Kohl’s stakeholders is that its recent holiday results continued a downward trend for its comps in 2018. The chain reported a 3.6 percent increase in the first quarter followed by a 3.1 percent gain during the second and a 2.5 percent improvement in the third.
Macy’s, like its rivals, reported a gain of only 1.1 percent in same-store sales during the holiday season, continuing an up and down comp trend for the year. The retailer posted a 3.1 percent increase in the third quarter preceded by flat comps in the second quarter and 3.9 percent growth in the first.
Macy's share price fell 17 percent yesterday after announcing the disappointing performance during one of the strongest holiday selling seasons in recent years. The retailer also reduced its sales and profit guidance for its 2018 fiscal year.