Impacted by the harsh winter weather that extended into many parts of the country into February and March, delays related to a West Coast port dispute, and general softness in consumer spending, several department stores last week reported disappointing first-quarter results.
Macy’s Inc., the largest department store chain, reported first-quarter earnings slid 13.8 percent, to $193 million, or 56 cents a share. Sales for the period fell 0.7 percent from last year to $6.2 billion. Same-store sales were also off 0.7 percent.
“We had expected our first quarter sales to grow at a rate lower than our guidance for the full year. We fell short because of a confluence of factors,” said Terry Lundgren, chairman and CEO. “Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy’s and Bloomingdale’s stores, including New York City, Chicago, Las Vegas and San Francisco.”
The omnichannel reorganization in its merchandising, planning and marketing organizations announced in January and February also caused some temporary disruption.
Looking ahead, Lundgren was optimistic about Macy’s growth prospects due to its focus on its top 150 stores, major growth trends in active categories, success in dresses and the launch of its new Plenti loyalty rewards program. While soft overall, active, dresses, furniture, and mattresses all saw “very strong” sales in the quarter.
Kohl’s Inc. reported Q1 earnings increased 1.6 percent to $127 million, or 63 cents a share. Same-store sales inched up 1.4 percent, slower than the 1.5 percent to 2.5 percent growth the retailer had forecast for the year, and also a marked slowdown from the fourth quarter, when comps grew 3.7 percent. The shortfall was attributed to weaker traffic, which was essentially flat in the quarter.
“Sales were modestly below our original expectations for the quarter, but accelerated in the March/April combined period after a weak February,” said Kevin Mansell, chairman, CEO and president. “We are very pleased with our earnings results, with a more balanced promotional calendar driving merchandise margin combined with strong expense control.”
One bright spot was its active categories, which delivered a high teen comp for the quarter. Mansell said Kohl’s remains committed to expanding its active offerings, including expanding Nike offerings; new and expanded brand launches including Bliss, Gaiam Yoga apparel and Champion and Puma; and a relaunch of the Columbia brand this fall. Said Mansell, “We're capturing the active and wellness market. Momentum in this category is strong and continues to grow even stronger.”
Nordstrom Inc. reported earnings dipped 8.6 percent in the first quarter to $128 million, or 66 cents a share, in line with expectations and due to planned growth initiatives related to Trunk Club, its Canada expansion and continuing fulfillment and technology investments.
Comparable-store sales gained 4.2 percent, led by women's and men's apparel. On a comp basis, sales grew 20 percent at Nordstrom.com and inched up 0.5 percent at its full-line department stores. Nordstrom Rack’s comps were down 0.2 percent on top of last year's increase of 6.4 percent, consistent with its two-year stacked trend.
J.C. Penney Co. narrowed its first-quarter loss to $173 million, or 55 cents a share, from $352 million, or $1.55, a year ago. Revenues rose 2.1 percent to $2.86 billion. Same-store sales were up 3.4 percent. Women’s apparel, men`s and home were the top performing merchandise divisions.
CEO Mike Ullman said shoppers have responded to new merchandising and store renovations, as well as a new home catalog. Said Ullman, “We had a very strong Easter and despite the West Coast port issues, internal headwinds from last year's elevated clearance business, and unseasonable weather, we grew the top line, drove profitability and delivered a strong financial performance for the quarter.”
J.C. Penney now expects same-store sales to rise 4 percent to 5 percent for the year, up from previous guidance of 3 percent to 5 percent.
Dillard’s Inc. reported net income slipped 1.9 percent in the first quarter, to $109.6 million, or $2.66 per share, missing Wall Street’s consensus estimate of $2.80. Sales inched up 1.5 percent to $1.55 billion. Sales trends were strongest in the juniors' and children's apparel category followed by shoes and ladies' apparel. Sales were notably weak in the home and furniture category. Comparable-store sales dipped 1 percent.
“We are disappointed with our first quarter performance,” said CEO William T. Dillard, II. “Our 1 percent sales decline hampered our ability to leverage operating expenses and to drive net income growth. Although inventory is higher than we would like, we believe the levels are manageable.”
