The holiday season is a make-or-break time for retailers. The period is marked by a flurry of deals as retailers flood the markets with offers and promotions. Since the season accounts for a sizeable chunk of yearly revenues and profits, retailers grab every opportunity to drive footfall. Today's article revolves around three department store stocks - Macy's, Inc.'sM , J. C. Penney Company, Inc.JCP and Kohl's CorporationKSS - as to how the holiday season has unfolded for them.
The impact of challenging retail landscape, stiff competition from online retailers such as Amazon.com, Inc. AMZN and waning store traffic was clearly visible on these stocks, which belong to Zacks categorized Retail-Regional Department Stores industry. We noted that the industry occupies a space in the bottom 31% of the Zacks Classified industries (184 out of the 265). Further, the broader Retail And Wholesale sector of which they are a part, is also placed at bottom 38% of the Zacks Classified sectors (10 out of 16).
From the above mentioned scenario, it is quite evident that the near term outlook for the industry is bleak, and chances of a rebound is very slim. Nevertheless, department stores are leaving no stone unturned to combat the prevailing headwinds. Let's take a closer look.
Macy's Register Dismal Holiday Sales
Macy's holiday sales results came below expectations. The lackluster performance compelled management to trim its fiscal 2016 earnings projection. Comparable sales on an owned plus licensed basis decreased 2.1% during November and December period combined, while on an owned basis, comparable sales fell 2.7%. Macy's now envisions fiscal 2016 earnings in the band of $2.95-$3.10, down from a range of $3.15-$3.40, forecasted earlier.
After disappointing holiday sales results Macy's will struggle to find place in investors' good books, and management is also not unaware of this fact. The company, in a bid to calm investors' jitters, announced a slew of measures revolving around stores closures, cost containment, real estate strategy and investment in omnichannel capabilities.
Shares of this Zacks Rank #3 (Hold) company have plunged 15.5%, since the announcement of holiday sales results on Jan 4, 2017.
JC Penney Posts Soft Holiday Sales
Shares of J. C. Penney have declined 7.5%, following the outcome of holiday sales results on Jan 6, 2017. The company's comparable-store sales declined 0.8% during the November and December period combined. The first three weeks of November were especially challenging. The company saw robust performance from appliances, boots, outerwear, toys, fine jewelry and Sephora. However, sustained weakness in women's apparel marred the overall performance.
Nevertheless, J. C. Penney has taken up several strategic initiatives to drive traffic. The company, in order to enhance customer shopping experience, has been focusing on remodeling, renovating and refurbishing its stores with special focus on enhancing high-margin center core department that houses handbags, fashion accessories, sunglasses and fashion jewelry.
J. C. Penney currently carries a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Kohl's Witnesses Weak Holiday Sales
Despite sturdy sales on Black Friday and the week before Christmas, Kohl's comparable sales fell 2.1% in the combined November and December period. Total sales for the period also declined 2.7%.
Aggressive promotional environment, changes in consumer spending patterns and stiff competition from discount retailers may be cited as reasons behind the company's dismal performance, which compelled it to lower its profit outlook. Management now envisions fiscal 2016 earnings in the range of $3.60-$3.65 per share, down from $3.80-$4.00.
The disappointing holiday sales and trimmed guidance, consequently, hurt investors' sentiment. Shares of this Zacks Rank #3 company have plummeted 20.6%, since the announcement of holiday sales results on Jan 4, 2017.
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