Department stores reported a mixture of earnings results in the fourth quarter, but the big news from the period included store closures (J.C. Penney Co.) and job cuts (Macy’s). Last quarter also saw the untimely passing of Blake Nordstrom, who died on January 2 at age 58.

Here’s a rundown of the department store earnings that came out in the past week:

JCPenney’s Q4 Earnings Tumble

The 411 – On a shifted basis, which compares the 13 weeks ended February 2, 2019, and February 3, 2018, J.C. Penney’s comparable sales decreased 4 percent. On an unshifted basis, comparable sales for the fourth quarter decreased 6 percent. Net income for the quarter was $75 million, or 24 cents per share. Adjusted net income was $57 million, or 18 cents per share, ahead of estimates by 7 cents and compared to adjusted net income of $160 million, or 51 cents per share, last year. The company also announced it will close 18 full-line stores in 2019, including the three locations previously announced in January. It will also close nine ancillary home and furniture stores.

Reaction – “For the past few months, I have met with and listened to JCPenney associates throughout the organization, as well as our valued suppliers, customers and other partners, to gain their candid perspectives on our company, both positive and constructive. Based on everything I have seen and heard, I am even more convinced that JCPenney is a revered brand that has the capacity to deliver improved results. In spite of our past financial performance, we have already taken meaningful steps to drive improvement in key businesses such as women’s apparel, active apparel, special sized apparel and fine jewelry.”
–Jill Soltau, CEO, J.C. Penney

What’s next? – All store closures are expected to occur in Q2. During the first half of 2019, the company expects to record an estimated pre-tax charge of approximately $15 million, primarily relating to non-cash asset impairments and transition costs, in connection with this action. Also, the company currently expects free cash flow to be positive for fiscal year 2019.

Macy’s Earnings Top Guidance, To Cut 100 Jobs In Restructuring

The 411 – Macy’s Inc. reported earnings on an adjusted basis dipped slightly in the fourth quarter but came ahead of updated guidance provided in early January. Revenue of $8.5 billion beat Wall Street’s targets by $20 million. Along with reporting Q4 earnings, Macy’s also announced a restructuring plan that will eliminate 100 vice-president level or above roles, “to increase the speed of decision making.”

Reaction – “Looking at the fourth quarter of 2018, while we delivered positive comparable sales against what was a strong holiday season in 2017, results were lower than our expectations. We experienced another quarter of double-digit growth in digital. We also saw continued improvement in our brick and mortar trends with the Growth50 stores outperforming the fleet.”
– Jeff Gennette, Chairman and CEO, Macy’s Inc.

What’s next? – As an initial step in the company’s 2019 productivity plan, Macy’s announced a restructuring that “reduces the complexity of the upper management structure to increase the speed of decision making, reduce costs and respond to changing customer expectations. Importantly, it also allows the company to put additional resources behind three focus areas: improving supply chain efficiency; innovating and enhancing inventory management; and building a larger and healthier customer base.”

Dillard’s Comps Grow 2 Percent In Fiscal Year And Q4

The 411 – Dillard’s reported net income for the 13 weeks ended February 2 of $85.1 million, or $3.22 per share, compared to net income of $157.6 million, or $5.55 per share, for the 14 weeks ended February 3, 2018. Net sales for the 13 weeks ended February 2, 2019 were $2.011 billion and $2.061 billion for the 14 weeks ended February 3, 2018. Total merchandise sales increased 1 percent and sales in comparable stores increased 2 percent.

Reaction – “Our 2 percent comparable store sales increase for 2018 is comprised of four quarters of positive sales. For the year, we held retail gross margin and operating expenses flat as a percent of sales. Additionally, during 2018, we returned $139 million to shareholders through share repurchases and dividends.”
–William T. Dillard II, CEO, Dillard’s

What’s next? – Dillard’s didn’t issue guidance in its quarterly report. The company did say it would close its Southern Park Mall location in Boardman, OH, during the first quarter of 2019.

Nordstrom’s Q4 Impacted By Weakness At Full-Price Stores

The 411 – Nordstrom reported earnings before interest and taxes (EBIT) slid 4.9 percent in Q4 due to soft sales at its full-price stores that led to markdown pressures. Earnings in the quarter ended February 2 were generally in-line with the company’s updated expectations provided January 15. Net sales in the quarter decreased 4.7 percent, or increased 0.1 percent excluding the 53rd week in 2017 of approximately $220 million. Comparable sales, which were not impacted by the 53rd week, increased 0.1 percent.

Reaction – “While we have the right strategies in place, we are not satisfied with our current financial results. We planned 2018 as the inflection point for improved profitability, and we missed this objective. We have a high sense of urgency to deliver on our profit margin expectations. This means executing our levers to drive our top and bottom line. We’re focused on getting back on track with our profitability goals, and we reaffirm our financial targets that we laid out during Investor Day last July.”
–Erik Nordstrom, Co-President, Nordstrom Inc.

What’s next? – This was the company’s first earnings call since the passing of Blake Nordstrom on January 2 (read our coverage by clicking here), so instead of the usual executive or analyst comment, here is a portion of Erik Nordstrom’s comment from Thursday’s earnings call about the loss:

“This has been a painful and difficult time for our family and our company. Blake’s impact around here is immeasurable. He loved this business and was so good at it. I think the most important impact Blake had on our company was with our people. In many ways, he brought our culture and values to life. He was the most genuine person I have ever known, and his authenticity helped him make real connections with people inside and outside of our company, many of you included. Pete [Nordstrom], Blake and I worked closely as a team our entire lives, most especially over the last 20 years and most recently as co-presidents. We miss Blake terribly but are inspired by his example, and all of us are committed to keeping his legacy alive by being the best retailer we can be.”

Photo courtesy J.C. Penney Co.