Macy’s & JCPenney Saw Better Holiday Sales, Thanks to Digital, But More Store Closures to Come

Macy's
Macy's
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Macy’s Inc. and J.C. Penney Co. Inc. today reported comparable sales gains during the all-important holiday season, lending credence to reports that the weeks between Thanksgiving and New Year’s were a success for beleaguered retailers.

JCPenney said its comparable store sales for the combined nine-week period ending Dec. 30 increased 3.4 percent over the same period last year. Its gains during the season were led by its home, beauty and fine-jewelry divisions along with an improvement in its previously soft apparel business — led by women’s and kids.

Macy’s said its comparable sales on an owned basis increased 1 percent in the months of November and December, and 1.1 percent on an owned plus licensed basis. Nevertheless, the company said it would close another 11 outposts in early 2018 — it previously announced plans to close more than 100 stores between 2016 and 2017 — in an attempt to improve efficiencies and allocate resources to support its digital-heavy growth strategy. The firm expects to see around $300 million in annual expense savings from the store closures, staff reductions and streamlining of non-store functions. Including the stores announced today, Macy’s has closed 124 stores since 2015.

Both Macy’s and JCPenney — which had increasingly faced criticism as retail’s challenges seemed to disproportionately impact department stores — cited digital strength and a better omnichannel cohesion as growth drivers during the holiday season.

Our ability to execute e-commerce fulfillment from 100 percent of our brick-and-mortar stores helped fuel the growth in e-commerce for the holiday season,” said JCPenney chairman and CEO Marvin Ellison, listing toys, boots and athletic footwear among the top-performing digital categories.

Macy’s also noted double-digit growth on its digital platforms, listing apparel, shoes, dresses and coats among its top-performing categories.

JCPenney reaffirmed its most recent full-year financial guidance, which calls for comp sales to be down 1 percent to flat and adjusted earnings per share in the range of 2 to 8 cents.

Macy’s narrowed the range of its previously provided full-year sales guidance. The company now expects comparable sales on an owned basis to decline between 2.4 percent and 2.7 percent, with comparable sales on an owned plus licensed basis to decline between 2 percent and 2.3 percent. Total sales are expected to be down between 3.6 percent and 3.9 percent in fiscal 2017. Excluding the change in federal tax law, Macy’s Inc. anticipates earnings results for the full year to be in the upper end of previously disclosed guidance, in the range of $3.53 to $3.63. Including the new tax law, Macy’s expects earnings per share in the range of $3.59 to $3.69.

At market open, Macy’s shares reversed modest premarket gains, starting the day down 3.5 percent to $24.44. JCPenney opened down 2.2 percent to $3.62.