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Who Wore It Better? Macy's (M) V.S. Kohl's (KSS) Department Store Q2 Earnings Releases

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Before the bell on Thursday, two of the U.S.'s largest department store retailers reported their most recent quarters' financial results. The retail sector and department stores in particular have seen their fair share of struggles in recent months, despite a recovering U.S. economy and seemingly growing consumer spending levels, so investors were greatly anticipating these earnings reports to see the state of the two companies.

Below are these two department stores and some of the results from these recent earnings reports, as well as how they're stocks are reacting in trading today.

Macy's Inc. M

Macy's Inc. reported their second quarter 2016 financial results this morning, and was able to post a beat on both earnings and revenue estimates. Adjusted earnings came in at $0.54 per share, much higher than the Zacks Consensus EPS Estimate of $0.40. Revenue figures came in higher than expected too at $5.87 billion, compared to the Zacks Consensus Estimate of $5.75 billion.

The retailer also said that comparable sales on an owned plus licensed basis fell 2%, while on an owned basis, comparable sales fell 2.6%. For the full-year, Macy's now projects sales on an owned plus licensed basis to decline about 3-4%. Also, as part of a store rationalization program, Macy's announced that it plans to shut down nearly 100 full-line locations. Most of the closings will come in the early part of 2017.

Shares of Macy's were trading more than 13% higher in mid-morning trade Thursday. Macy's is currently a Zacks Rank #3 (Hold).

MACYS INC Price and EPS Surprise

MACYS INC Price and EPS Surprise | MACYS INC Quote

Kohl's Corporation KSS

The other department store retailer that reported earnings this morning was Kohl's Corp., who reported their second quarter 2016 financial results. The company reported EPS of $1.22, coming in higher than the Zacks Consensus Estimate of $1.04 by 17.3%. Earnings also grew 14% year-over-year as higher gross margins and better expense management paid off. Revenues for the quarter also beat estimates, albeit by a small margin. Kohl's reported revenue of $4.18 billion, just above the Zacks Consensus Estimate revenue of $4.16 billion.

Same-store sales declined 1.8% in the second quarter, narrower than the prior quarter's decline of 3.9%. For Q2 2015 sales increased a slight 0.1%. The company has tried to boost sales with its strategic initiative "Greatness Agenda", it seems as though it is not catching on like Kohl's had hoped. Kohl's also announced the slashing of its earnings guidance for the rest of the year due to sluggish same-store sales and an overall difficult sales scenario. The company now expects its adjusted fiscal 2016 earnings to be in the range of $3.80 to $4.00 per share, lower than their previous guidance of $4.05 to $4.25 per share.

Shares of Kohl's were nearly 12% higher in mid-morning trade Thursday. The company is currently a Zacks Rank #4 (Sell).

KOHLS CORP Price and EPS Surprise

KOHLS CORP Price and EPS Surprise | KOHLS CORP Quote

Bottom Line

Both department store retailers were able to deliver beats on both earnings and revenue estimates, though many would likely consider the results mixed as same-store sales declined for both compared to Q2 of last year. Both saw their shares spike in the markets as investors apparently liked what they saw though. The brick and mortar retail scene will likely continue to be an uphill battle, but these two clearly showed that there is still hope for both of their businesses. (Also Read: Retailers Are Down, But Are They Out? )

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MACYS INC (M): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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