- In this May 16, 2018 file photo, a man enters the JC
Penney store at the Manhattan mall in New York. J.C.
J.C. Penney Co. (JCP) on Tuesday, May 21, 2019. reported
a loss of $154 million in its fiscal first quarter. The
Plano, Texas-based company said it had a loss of 48
cents per share. Losses, adjusted for one-time gains and
costs, came to 46 cents per share. The results missed
Wall Street expectations.
NEW YORK — The outlook for
department stores got murkier Tuesday after J.C. Penney and Kohl's
reported fiscal first quarter results that showed they struggled at
the start of the year.
Penney, which has been trying to turn around its business for
several years after a disastrous reinvention plan, reported a wider
than expected loss and sales declines during the quarter. Kohl's
sales momentum took a pause during the quarter as well, and it cut
its fiscal 2020 profit outlook as it struggled with slumping sales.
It cited damp weather that cut into sales of spring clothing and a
competitive environment in discounted home goods.
The downbeat reports from the mid-priced department stores,
announced Tuesday, were in contrast to Macy's performance, reported
last week. Macy's first-quarter profit smashed Wall Street
estimates. Macy's also put up its sixth consecutive quarter of
increases in comparable store sales — or sales in stores open a year
— fueled by its robust online business after a three-year sales
Department stores have been trying to reinvent themselves as more
shoppers go online. They've also been hurt by increasing competition
from the likes of T.J. Maxx and other off-price stores, which offer
coveted brands at cheaper prices. T.J. Maxx's parent reported on
Tuesday strong results that topped Wall Street estimates, indicating
that shoppers continue to be drawn to its treasure hunt experience.
Upscale Nordstrom, which reported results after the close of trading
on Wall Street, reported a first quarter sales drop and cut its
annual sales forecast.
To lure customers, department stores have been doing a variety of
things like offering exclusive merchandise and adding online
services. Last month, Kohl's said it was expanding is partnership
with Amazon, with plans to accept Amazon returns in all of its 1,150
stores starting in July. Kohl's also announced Tuesday it's
launching an exclusive collection with designer Jason Wu as a way to
get younger shoppers in their stores. But apparently, those efforts
haven't yet translated into higher sales.
"The middle market is collapsing," says Steve Dennis, a strategic
retail adviser. "They're fighting so many headwinds."
-This May 11, 2017 file photo shows a Kohl's department
store, in Doral, Fla. Kohl's Corp. (KSS) on Tuesday, May
21, 2019, reported fiscal first-quarter net income of
$62 million. On a per-share basis, the Menomonee Falls,
Wisconsin-based company said it had profit of 38 cents.
Earnings, adjusted for asset impairment costs, came to
61 cents per share. The results missed Wall Street
stores are facing the threat of escalating trade wars
with China that could mean higher prices on clothing and
other goods. Retailers had been left largely unscathed
by the first several rounds of tariffs since they
focused more on industrial and agricultural products.
But products like furniture saw an increase in tariffs
to 25% two weeks ago. And now the administration is
preparing to extend the 25% tariffs to practically all
Chinese imports not already hit with levies including
toys, shirts, household goods and sneakers, which
furnish department stores.
J.C. Penney and Kohl's both said there's been minimal
impact from the tariffs already in effect, but they say
the fourth round has them especially worried. Their
comments echoed that of other executives from Macy's and
Walmart last week. The question is how resilient
shoppers will be in the face of higher prices even as
the economy remains strong.
"The year has started off slower than we'd like, with
our first quarter sales coming in below our
expectation," said Michelle Gass, Kohl's CEO in a
statement. "We are actively addressing the opportunities
that impacted our first quarter sales, and we have
strong initiatives that will enhance our sales
performance in the second half."
Kohl's Corp., based in Menomonee Falls, Wisconsin,
reported first-quarter net income of $62 million, or 38
cents per share.
Earnings, adjusted for asset impairment costs, came to
61 cents per share, missing the average Street estimate
of 67 cents per share.
The department store operator posted revenue of $4.09
billion in the period, also falling short of forecasts
of $4.2 billion.
Kohl's now expects full-year earnings per share earnings
in the range of $5.15 to $5.45, down from a previous
range of $5.80 to $6.15. Analysts expect $6.03 per share
for the year, according to FactSet estimates.
Meanwhile, J.C. Penney's CEO Jill Soltau, who took the
helm last October, is facing more pressure to turn
around its business. The Plano, Texas-based company is
bringing in new executives while trying to come up with
a plan to get shoppers into its stores. On a conference
call, Soltau declined to divulge specifics and said that
she wasn't ready for "prime time."
J.C. Penney Co. reported a quarterly loss of $154
million, or 48 cents per share. Losses, adjusted for
one-time gains and costs, came to 46 cents per share.
That's worse than the per share loss of 39 cents Wall
Street was expecting, according to a survey by Zacks
The company's revenue was $2.56 billion, down 5.6%.
Same-store sales fell 5.5%. The company attributed part
of the sales drop to its move to get rid of major
appliances and furniture, which were eating away at
Kohl's shares tumbled 11%, or $6.87, to $56.04 in late
morning trading, while J.C. Penney's shares fell nearly
10%, or 11 cents, to $1.04.