<span style="color: #a3a3a3;">Four of the five big department stores—J. C. Penney Corp., Macy’s Inc., The TJX Cos. Inc. and Kohl’s Corp.—beat Wall Street’s earnings and revenue estimates during the fourth quarter ended February 1.
Only Dillard’s Inc. fell shy of analysts’ projections for the period, which included a shortened Holiday Season due to a later-than-normal Thanksgiving and Black Friday.
Below is a rundown of the fourth-quarter earnings that department and discount stores reported in the past week or so.
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J. C. Penney’s Q4 Comps Slide 7 Percent
J. C. Penney reported earnings on an adjusted basis fell 24.6 percent in the fourth quarter as same-store sales declined 7 percent. Total net sales for the 2019 fourth quarter decreased 7.7 percent to $3.38 billion. Adjusted comparable store sales, which exclude the impact of the company’s exit from major appliance and in-store furniture categories, decreased 4.7 percent for the quarter. The company beat Wall Street’s earnings and revenue estimates.
Reaction
“In Fiscal 2019, we met or exceeded all five financial guidance metrics for the year, and we delivered our third consecutive quarter of meaningful gross-margin improvement in the fourth quarter. I am encouraged by our progress, especially in our women’s apparel businesses. We knew it would take time to restore discipline and return growth to JCPenney. As we move into Fiscal 2020, we remain focused on the key tenets of retail as we continue rebuilding the company and implementing our Plan for Renewal.” —Jill Soltau, CEO, J. C. Penney
What’s Next
The company’s financial guidance for full-year fiscal 2020 did not include any potential impact from the current coronavirus situation. J. C. Penney expects comparable store sales to be in a range of (3.5) percent to (4.5) percent; cost of goods sold, as a rate of net sales, to improve 100 to 130 basis points compared to last year; adjusted EBITDA dollars to increase 5 percent to 10 percent compared to last year; and free cash flow to be positive.
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Macy’s Q4 Exceeds Wall Street’s Target
Macy’s Inc. reported both earnings and sales were down in the fourth quarter, but sales were down less than expected, decreasing just 1.4 percent to $8.34 billion. Comparable sales at Macy’s owned and licensed stores fell 0.7 percent in the fourth quarter ended February 1, compared with the 0.93 percent drop estimated by analysts. On an adjusted basis, earnings in the quarter fell 22.2 percent to $661 million, or $2.12 a share, from $850 million, or $2.73, a year ago. Macy’s revenue and earnings exceeded Wall Street’s consensus target.
Reaction
“Taken as a whole, 2019 did not play out as we intended for Macy’s Inc. However, we executed well during the Holiday 2019 season. We were pleased with the significant trend improvement in the fourth quarter, including a meaningful sales uptick in the 10 shopping days before Christmas. Together with disciplined expense management, our solid sales results in the fourth quarter allowed us to deliver stronger-than-expected earnings results. Importantly, we exited the year with a clean inventory position.” —Jeff Gennette, Chairman and CEO, Macy’s Inc.
What’s Next
Macy’s reiterated its previously provided annual guidance for 2020. The company expects sales to range between $23.6 billion to $23.9 billion; comparable sales owned to be up approximately 40 basis points better than owned plus licensed; owned plus licensed to be down in the range of 2.5 percent to 1.5 percent; and adjusted diluted earnings per share in the range of $2.45 to $2.65.
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Dillard’s Falls Shy Of Fourth-Quarter Expectations
Dillard’s Inc. reported earnings per share of $2.75 for the fiscal fourth quarter ended February 1, down from $3.22 in the year-ago period. Revenue of $1.92 billion marked a 4.5 percent year-over-year decline and fell short of estimates by $110 million. Comparable store sales decreased 3 percent against a 2 percent increase in the prior-year fourth quarter. Dillard’s EPS and revenue were shy of Wall Street’s consensus expectations.
Reaction
“A weak top-line weighed heavily on the bottom line in the fourth quarter. However, we achieved a consecutive 4 percent decline in inventory while maintaining a flat gross margin rate. As U.S. department store retailing continues to right-size, our conservative financial approach supports our long-term view. We continue to focus on improving our results and on shareholder return.” —William T. Dillard II, CEO, Dillard’s
What’s Next
Dillard’s didn’t issue guidance in its quarterly report. But the company did announce plans to open two new stores: one at Mesa Mall in Grand Junction, CO, during the third quarter of 2020 (105,000 square feet); and one at University Place in Orem, UT, in Spring 2021 (160,000 square feet). Both opportunities arose from peer closures at those centers.
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Customer Traffic Fuels Revenue And Comp Growth At TJX Cos.
The TJX Cos. Inc. reported net sales for the fiscal fourth quarter ended February 1 increased 10 percent to $12.2 billion. Consolidated comparable store sales increased 6 percent over a 6 percent increase last year driven by improved customer traffic. Net income for the fourth quarter was $985 million. Diluted earnings per share were 81 cents, a 19 percent increase versus the prior year’s 68 cents and ahead of analyst targets by 4 cents. TJX beat both earnings and revenue expectations.
Reaction
“We are extremely pleased with our strong fourth-quarter results, as both sales and earnings per share significantly exceeded our expectations. Fourth-quarter consolidated comparable store sales increased a very strong 6 percent, over a 6 percent increase last year. We saw strength across the company, with each major division delivering comp sales growth of 4 percent or higher, all over strong increases last year and all primarily driven by customer traffic. Our exciting brands and gift-giving assortments at great values, supported by our marketing, attracted customers around the globe during the holiday season and beyond. Fourth-quarter earnings per share of $.81 were also well above our guidance.”—Ernie Herrman, President and CEO, The TJX Cos. Inc.
What’s Next
For the 52-week fiscal year ending January 30, 2021, TJX expects diluted earnings per share to be in the range of $2.77 to $2.83, which would represent a 4 percent to 6 percent increase over the prior year’s $2.67. This EPS outlook is based upon estimated comparable store sales growth of 2 percent to 3 percent on both a consolidated basis and at Marmaxx.
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Kohl’s Q4 Earnings Top Wall Street Targets
Kohl’s Corp. reported a small decline in earnings in the fourth quarter on flat same-store sales. In the quarter ended February 1, sales inched up 0.1 percent to $6.832 billion from $6.823 billion. Same-store sales were flat against a 1.0 percent gain a year ago. Earnings declined 3 percent to $265 million, or $1.72 a share, from $272 million, or $1.67, a year ago. Kohl’s exceeded Wall Street’s targets in both EPS and revenue.
Reaction
“While 2019 was a year in which our financial results did not meet our expectations, it was also a year of innovation and investment that further strengthened Kohl’s differentiation in the market. We are encouraged by the acceleration of traffic and new customer acquisition in our stores and online driven by the unprecedented level of new brands and partnerships we launched during the year. I want to thank all of our associates for their ongoing commitment to Kohl’s, and I am confident that we will build on our strengths in 2020 to stabilize and position the business for future growth.” – Michelle Gass, CEO, Kohl’s
What’s Next
Kohl’s expects earnings per diluted share of $4.20 to $4.60 for fiscal 2020 based on comparable sales in the range of negative 1 percent and positive 1 percent; gross margin as a percentage of sales decrease of 10 to 20 basis points as compared to 2019; SG&A dollars increase of 1 percent to 2 percent over 2019; depreciation expense of $940 million; interest expense of $210 million; and effective tax rate of 24 percent to 25 percent.
Photo courtesy The Galleria, Houston, TX
