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The Year Of The Department Store Overhaul

Laura Brodbeck

Big name retailers suffered in 2015 as e-commerce gained popularity and many stores found their inventories rising faster than their sales figures.

However, retail has been a popular choice for investors so far in 2016 as many brick-and-mortar shops are pledging to turn things around by cutting costs, increasing margins and improving their online presence.

Nordstrom, Inc. (NYSE: JWN)

High-end department store Nordstrom saw its same-store sales decline in the third quarter and the company's total sales came in below expectations. Like many of its peers, Nordstrom execs pointed to consumers' reluctance to spend on clothing and other items, but the company is hoping to boost its bottom line through increased investment.

The company has focused on improving technology in order to drive traffic to its website and ramp up its online marketing efforts. The firm has also worked to expand its Nordstrom Rack brand, which offers customers offseason items for deeply discounted prices. Offering a low-price alternative is likely to attract millennial shoppers, who are much more cash conscious than previous generations.

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Macy's, Inc. (NYSE: M)

Macy's is similarly hoping to make a turnaround in 2016 after releasing lackluster holiday sales and warning that the slump is expected to continue through January. The company is planning to close 40 of its stores and cut 4,800 jobs in order to focus on its most profitable locations.

Over the weekend, Starboard Value LP began a campaign to persuade Macy's to sell some of its real estate positions in order to boost its available cash. While Macy's rejected Starboard's initial calls to completely spin off its real estate holdings, the company is considering selling minority stakes and will take Starboard's latest proposal under review.

Kohl's Corporation (NYSE: KSS)

Much like its peers, Kohl's has been struggling as consumers turn to online buying options and discount stores. Despite the fact that Kohl's has been able to make worthwhile improvements and drive existing store sales higher, investors have abandoned the stock leaving shares to fall more than 20 percent over the past year.

The company's dismal stock price could make Kohl's a target for activist investors, so the firm is considering whether to go private or hire an investment bank to advise on future decisions.

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