Last week, Macy’s, J.C. Penney, Nordstrom and Kohl’s reported their results for the second quarter and first half. During the accompanying earnings calls, each department stores focused on the updates and changes to their apparel offerings they hope will result in increased foot traffic and sales in the second half and beyond.
While the planned executions may vary, across the board four common strategies emerged: a focus on private label to differentiate each chain and help control markdowns; a race to bolster activewear, which in most cases is outperforming other categories; a commitment to on-trend products to drive consumer interest; and an investment in the supply chain in an effort to deliver goods on time, further reducing the need for promotions and allowing them get better at hitting the moving target that is fashion apparel.
Despite a net loss for the quarter, J.C. Penney reported improving comps in apparel, which it says is driven by new its apparel initiatives.
Though clothing still underperformed, specific areas like plus-size have the company optimistic. “I’m pleased to report that our continued focus on the special size business allowed us to deliver a 700-basis-point trend improvement in our total special size businesses across women’s, kids, and men,” said Chairman and CEO Marvin Ellison. “We will intensify our commitment to being a destination for special size apparel for all customers.”
The focus on girls’ plus and boys husky drove a 700 basis pkoint comp improvement in kids from this quarter over the last, boosting what had been the company’s most challenging department.
JCP is continuing to try to get a handle on its women’s assortment, which skewed too far into traditional apparel rather than casual and contemporary clothing, Ellison said. More of the latter will hit stores for fall and holiday, following an “aggressive” liquidation of the product that missed the mark.
The new assortment will be lead by activewear, with additional Nike and Adidas product as well as J.C. Penney’s private Xersion brand.
JCP is hoping its opening price point goods will also get a boost from City Streets, a new private label collection that’s described as trend-right and contemporary.
The retailer is also launching two proprietary brands: the new Libby Edelman collection across apparel, footwear and accessories, and the Project Runway line, based on the long-running fashion competition show. Both collections will be offered in 500 stores and online.
In addition to product, speed is also a focus going forward.
“During the fall season, we will enjoy a 40 percent improvement in design to delivery cycle time in many of our private brands,” Ellison said. “And this will allow us to maintain trend relevance while reducing inventory.”
While children’s and women’s contemporary and classic sportswear remained “challenging” overall at Kohl’s, exclusive brands Simply Vera Vera Wang and LC Lauren Conrad posted double digit sales increases.
Private brands improved the most in the quarter compared to Q1, especially for Sonoma, Croft and Barrow and Apt 9, which Chairman, CEO and President Kevin Mansell attributed to the company’s speed initiative.
“Embracing speed in sourcing is the solution to changing the trend line in private brands, and private brands is the pathway to changing the trend line in women’s apparel,” Mansell stated.
Kohl’s biggest goal is increasing foot traffic to stores, and Mansell said national brands is a key component to that strategy. “National brands rose to 53% of sales in the quarter driven by active and Levi’s, Van Heusen and Fitbit,” he said.
[Read more about Kohl’s recent performance: Financial Roundup: Kohl’s Trends Up, Children’s Place Sees Gains, Dillard’s Numbers Down]
Kohl’s continues to bank on its active and wellness product, which achieved a mid-teen double digit growth over the previous year for both apparel and footwear.
When it was announced, the addition of Under Armour was expected to be the company’s biggest brand debut, and it has surpassed expectations. As a result, Kohl’s says “there’s more opportunity,” leading additional Under Armour product in stores for the fall and holiday seasons, particularly in footwear.
“Equally as important, active/wellness has turned into a big positive for the business,” Mansell said. “I’m excited we were able to introduce a big brand like that and still get a sales increase on the biggest brand in the store, which is Nike.”
Though Juniors was a miss, overall footwear was particularly strong for the quarter, led by athletic shoes. Active casual also did well, with Skechers, which struggled in Q1, making the biggest improvement.
At Nordstrom, which was the best overall performer of the group, increases were boosted by the company’s annual Anniversary sale, with beauty and women’s clothing leading the results. Further, three of the five best sellers during the sale event were proprietary brands.
That outcome in particular speaks to Nordstrom’s ongoing focus on newness and limited distribution product, which has also boosted full price selling and merchandise margins.
“When done right, the proprietary brands can be a real asset for us,” co-president and director Peter Nordstrom said. “It’s pretty clear that we have to find ways to distinguish ourselves in our offer.”
[Read more about J.C. Penney’s and Nordstrom’s quarterly performance: Financial Roundup: Penney’s Losses Widen, Anniversary Sale Lifts Nordstrom’s Top Line, Zalando Expands European Fulfillment]
As a result, Nordstrom plans to increase its proprietary brand offering going forward.
Additionally, Nordstrom continues to try to differentiate its assortment in its national brands as well, which it says helps to alleviate promotional pressure.
Speaking of the site specifically, Erik Nordstrom, co-president and director, said the goal is for a frictionless experience and to create “a place for discovery,” with Nordstrom as a fashion authority with a curated assortment.
Nordstrom is also continuing to see active performing well, and noted there again that its private brands like Zella allow it to limit promotions.
Macy’s was led in the quarter by women’s shoes, fine jewelry, fragrance and select apparel like dresses, and the retailer expects these categories to continue to be important in the second half.
Bloomingdale’s is seeing many initiatives performing well, including exclusive product, according to President and CEO Jeff Gennette. “They’re getting great traction on exclusive product. 100 percent Bloomingdale’s is really popular with the consumer,” he said, adding the retailer is increasing this assortment.
[Learn more about Macy’s product, marketing and store plans: Macy’s New Strategy Overshadowed by Full Year Guidance Update]
Similarly, private label is a focus for the Macy’s business. “We’ve spend a lot of time on supply chain, working at reduced numbers of suppliers, reducing numbers of weeks of production and focusing on regular price and first markdown sell through, making bigger brands bigger, focusing on more fashion that we get into most stores,” Gennette said.
Macy’s is continuing to expand its exclusive brand portfolio which it wants to take from 29 percent to 40 percent by 2020. The Avec Les Filles collection, which debuted in March, is “doing very well.” The company is also planning to bow a slate of additional labels, including the Anna Sui collection under the INC label, which it expects to do well when it launches in the fourth quarter.
Product is just one piece of the puzzle for the second half. The company is also focused on supply chain operations. “We’re really focused on freshness and making sure inventories are bought closer in to customer demand, and you’ll see a marked difference this holiday versus last,” Gennette said.