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Financial Roundup: Nordstrom Sales up on Off-Price, JC Penney Down on Apparel

Traditional department stores are attempting to steal share wherever they can find it. For Nordstrom, that’s off-price. For JC Penney, it’s shop-in-shops and home services.

Nordstrom sales up on off-price business

The company reported earnings per diluted share were up 19 percent to 37 cents for the first quarter ended April 29th. This compares to earnings per diluted share of 26 cents for the same period of the previous year.

Net sales reached $3.3 billion, an increase of 2.7 percent with off price cushioning losses. For full-line stores and, net sales were down 1.7 percent with women’s and men’s apparel were the best performers, while accessories lagged. Off-price stores and e-commerce saw a 8.7-percent increase in net sales.

Comp sales were down by .8 percent, compared to the same period last year for the company, with full-line comps down 2.8 percent and off price up 2.3 percent.

The retailer said off-price represents 30 percent of sales, is the largest source of new customers, and prompts a third of Rack customers to shop full-line stores. Nordstrom noted on its earnings call that the off-price business is on track to be its fastest growing business to hit $1 billion.

Net earnings were $63 million or 4.6 percent of net sales compared to $46 million or 3.3 percent of net sales in the same period of FY16.

Online sales accounted for 24 percent of net, with up 11 percent and off-price e-commerce up 19 percent. The retailer noted that mobile makes up more than half of its online traffic.

The company’s guidance remains the same at $2.75 to $3.00 earnings per diluted share, net sales up 3 to 4 percent and flat comps.

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JC Penney Continues to Struggle

The department store struggled with apparel in the first quarter, which resulted in challenges for the top line.

The retailer reported net sales of $2.7 billion for the first quarter, ended April 29th, down from $2.8 billion last year.

JC Penney saw a net loss of $180 million or 58 cents per share, partially due to $220 million of restructuring charges related to store closings.

Same store sales dropped by 3.5 percent for the quarter, owing to a “difficult” February, according to Marvin R. Ellison, chairman and chief executive officer. On the other hand, he said the company is encouraged by the 600 basis points improvement in comps for the March and April timeframe.

Though all apparel performed below expectations, the company saw positive signs in its women’s Now Trending items, activewear and dress categories, each of which will be a larger part of the business going forward.

JCP reported that its home department, Sephora, fine jewelry and salon all posted positive comps and proved to be the top performers. To capitalize on that momentum, the company will open 70 new Sephora locations this year. It also opened 100 more appliance showrooms in May and is testing new home services like heating and cooling, bathroom remodels and blind installation to take advantage of the resurgence in the housing market.

Gross margin was 36.3 percent of sales, an increase of 10 basis points over the same period during the previous year, which Ellison credits to a focus on pricing analytics, supply chain, store operations and merchandising systems.

The company is also expanding its ship from store capabilities. Adding it to all locations, will quadruple the number of products available online.

In March, Standard & Poor’s Rating Services upgraded the company’s credit rating one notch to B+. 

The company reaffirmed its full year guidance for 2017 of -1 to 1 percent comp store sales, a gross margin increase of 20 to 40 basis points over 2016 and adjusted earnings per share of 40 to 65 cents.