Macy's and Penney Bolstered Their Sales In the Holiday Season -- WSJ
January 05 2018 - 3:02AM
Dow Jones News
By Suzanne Kapner and Allison Prang
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 5, 2018).
A healthy economy and strong consumer spending gave a boost to
Macy's Inc. and J.C. Penney Co., which reported sales growth for
the critical holiday months.
Macy's said its same-store sales rose 1% in November and
December from a year earlier, while Penney reported a 3.4%
increase. The results were an improvement from a year earlier, when
declines occurred at both chains. The mall anchors are the first
large retailers to give investors a readout on the holiday
season.
Analysts and economists have predicted that low unemployment and
rising wages gave consumers at all income levels the confidence to
spend this holiday season. Retailers had their best holiday sales
since 2011, according to Mastercard SpendingPulse, which tracks all
forms of payments in stores and online.
Both Macy's and Penney have struggled with falling sales as
shoppers make fewer trips to malls and do more of their spending on
smartphones. They have responded by closing weaker locations and
ramping up investments in e-commerce.
"It was the first November-December increase for us since 2014,"
Macy's Chief Executive Jeff Gennette said in an interview. He added
that the retailer's momentum has continued into 2018.
Not all chains are faring better. Sears Holdings Corp. plans to
shut more than 100 stores in the next few months after a yearslong
sales decline. The 64 Kmart stores and 39 Sears stores will close
in March and April, the company said Thursday.
Sears's problems are benefitting some of its rivals. "We had
over 30% growth in appliances, and we think that market share is
coming from Sears," Penney CEO Marvin Ellison said in an
interview.
On Thursday, Macy's said it would close 11 stores earlier than
planned this year. They were part of about 100 closures the company
had announced in August 2016. Macy's also intends to reduce or
increase the number of employees in different stores.
Mr. Ellison said Penney wasn't planning any significant store
closings this year.
After weak sales last holiday season, Macy's announced plans to
cut 10,000 jobs and Penney unveiled plans to close 138 stores and
offer buyouts to 6,000 workers.
On Thursday, Macy's raised its adjusted earnings guidance for
fiscal year 2017 to be between $3.59 and $3.69 a share given the
effect tax reform will have on the company's yearly tax rate. The
retailer said it expects total sales during the 2017 fiscal year to
fall between 3.6% and 3.9%.
Neil Saunders, a managing director of research firm GlobalData
Retail, said that while the positive results at Macy's were a
welcome change from the sales declines it has been posting, he
cautioned that the retailer's growth is still weak and that it is
likely losing share to other competitors.
"These results are a step in the right direction, but Macy's has
a very long journey ahead of it before it can declare itself to be
on the path to prosperity," Mr. Saunders wrote in a note to
clients.
Penney said it was reaffirming its previous financial targets,
which include a forecast of fiscal 2017 comparable sales that will
be flat to down 1% from a year earlier.
"Consumer confidence is high, unemployment is low and we think
the new tax legislation will benefit our core customers," Mr.
Ellison said. "That should lead to positive sales growth in
2018."
After rallying in recent weeks, the shares of Macy's and Penney
slipped Thursday. Macy's shares closed off 3.3%, or 84 cents, to
$24.49. Penney shares fell one cent to $3.69.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Allison
Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
January 05, 2018 02:47 ET (07:47 GMT)
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