Stein Mart, Inc. SMRT became the latest to join the list of retailers — Kohl’s Corporation KSS, J. C. Penney JCP and Macy’s M — which have disappointed investors with holiday sales numbers. Management highlighted that the holiday marketing strategy failed to deliver desired results, consequently sales came below expectations. This specialty off-price retailer witnessed lower store traffic but strong digital sales.
This Jacksonville, FL-based company stated that comparable store sales for the nine-week period ended Jan 5 fell 3.3% on a shifted basis. However, the company registered higher average unit retail and digital sales growth of 20%.
It is a matter of introspection as to why these retailers did not deliver impressive numbers. Definitely, shifting shopping pattern from stores to online has been weighing on retailers. Analysts pointed that heightened competition from e-commerce players such as Amazon AMZN and other brick-&-mortar retailers, and a constant struggle to cope up with rapidly changing consumer trends might have taken a toll on the performance.
Let’s analyze how Kohl’s, J. C. Penney and Macy’s have fared this holiday season.
Kohl's Witnesses Weak Holiday Sales Growth
Kohl’s holiday sales growth rate decelerated sharply from the prior-year period. Comparable sales for the November-December period grew 1.2% compared with prior-year increase of about 6.9%. Nonetheless, the company registered “double-digit digital growth" during the festive period. Even management raised fiscal 2018 earnings view to $5.50-$5.55 from $5.35-$5.55 per share projected earlier. Attractive product offerings, marketing strategies and omni-channel endeavors remain primary strength of this Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
JC Penney’s Numbers Dampen Investors’ Mood
J. C. Penney’s comparable store sales for the nine-week period ended Jan 5, fell 3.5% on a shifted basis and declined 5.4% on an unshifted basis. However, the company maintained its target of generating positive free cash flow for fiscal 2018. It continues to anticipate inventory reduction of 8% and projects liquidity in excess of $2 billion by the end of the fiscal year.
The company has been struggling with high level of inventory, which in turn is hurting profitability. In this regard, management plans to right size inventory levels and shut down stores to help the company focus on core brands and categories that fetch profitable sales. This Zacks Rank #3 company plans to shut down three stores this spring as part of its evaluation program.
Macy’s Sales Figure Looks Unimpressive
Macy’s posted weaker-than-expected holiday sales figures, in spite of taking a slew of measures such as Backstage, Vendor Direct, Store Pickup, Loyalty Program and Growth50 stores. Comparable sales on an owned plus licensed basis rose 1.1% during November and December period combined, while on an owned basis, the metric inched up 0.7%. However, digital business of this Zacks Rank #3 company remained robust and recorded double-digit growth.
The company kick-started the season on a solid note primarily during Black Friday and the following Cyber Week but lost momentum in the mid-December period only to regain some pace during Christmas.
Following a disappointing holiday sales data, management trimmed fiscal 2018 projection. Macy’s now expects comparable sales on an owned plus licensed basis to increase about 2%, down from the prior expectation of 2.3-2.5% growth. Net sales are expected to remain flat year over year compared with earlier expectation of an increase of 0.3-0.7%. The company forecasts earnings in the band of $3.95-$4.00 per share, down from its prior view of $4.10-$4.30.
We note that shares of Stein Mart, Kohl’s, J. C. Penney and Macy’s have fallen 42.9%, 5.9%, 21.4 and 23.9%, respectively, compared with the Zacks Retail-Wholesale sector’s decline of 3.3% in the past three months.
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