Mixed holiday comparable sales reports indicate that mid-tier department store retailers continue to struggle, while discounters and off-pricers that had been doing well likely saw sales gains during November and December.
Macy’s Inc. was first out of the gate on Wednesday with its holiday sales report at down 0.6 percent. That was a respectable, but by no means outstanding, finish to the holiday selling period. The saving grace for Macy’s was that its sales report was far better than what analysts had expected. While the result was still a negative, it nevertheless ended above the “Street’s down 2.4 percent and Cowen’s down 2.6 percent estimate,” Oliver Chen, Cowen & Co’s retail analyst, said.
The reports continued to trickle in from retailers on Thursday.
Kohl’s Corp., another middle-market chain, saw its comparable sales decreased 0.2 percent. “We continue to see momentum in key areas including our digital business, active beauty and children’s, and solid performance in footwear and men’s. This was offset by softness in women’s, which we are working with speed to address,” CEO Michelle Gass said.
J.C. Penney Co. Inc. fared the worst.
Comparable sales for the nine-week period ended Jan. 4 fell 7.5 percent. After adjusting for the retailer’s exit from major appliance and in-store furniture categories, comparable sales were still down 5.3 percent. The retailer also affirmed guidance for fiscal year 2019, with comparable store sales in the range of down 7 percent to down 8 percent, and down 5 percent to down 6 percent on an adjusted basis.
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“Major department stores continued their tepid top line performance with holiday comparable store sales declining 0.2 percent and 0.6 percent for Kohl’s and Macy’s, respectively. The sector continues to underperform as alternative channels continue to resonate more favorably with consumers and gain share. Holiday performance suggests department stores will need to change more rapidly in 2020 to maintain their market position,” Christine Boni, vice president and senior credit officer at Moody’s Investors Service, said.
In comparison, and showing that off-mall value retail might have fared better in the same holiday period, warehouse club Costco Corp. on Wednesday said net sales for the five weeks ended Jan. 5 gained 10.5 percent to $17.04 billion. U.S. comparable sales for the same five weeks were up 9.4 percent, while sales in Canada rose 9 percent. The gain in other international operations was 7.5 percent. Costco operates 785 warehouses worldwide.
Neither Walmart Inc. nor Target Corp., the two key discounters, have disclosed holiday comparable sales, nor have any of the off-price retailers, but all are expected to report better results than their mid-tier department store competitors.