How Macy’s, JCPenney and Nordstrom Are Faring Right Now

For better or worse: the performances of mega department stores are very much indicative of the overall wellbeing of the retail sector. While market watchers generally believe the industry is healthier than at the height of digital disruption — for the most part, things remain uneven with a few hits and misses (although the latter has become a bit more frequent nowadays).

After a pressured few years, the largest player in the space, Macy’s Inc. showed signs of turnaround success in Q4, reported in February, evidencing the progress of its heightened omnichannel focus as well as its bid to ramp up in-store experiences during the holidays.

After struggling to eke out comp growth for several quarters, the chain’s comparable sales on an owned basis were up 1.3 percent — blowing past market forecasts for a meager comp gain of 0.3 percent. Its sales during the quarter gained 1.8 percent to $8.7 billion with earnings doubling year over to year to $2.82 per share — handily topping market watchers’ estimates for diluted EPS of $2.71. Macy’s chairman and CEO Jeff Gennette cited the firm’s preparedness for the 2017 holiday season as well as ongoing efforts — including its newly revamped loyalty program — as key factors that bolstered business during the fourth quarter.

Gains, analysts suggest, could come again for Macy’s when it reports Q1 on Wednesday, with forecasts calling for sales to rise 1 percent to $5.4 billion. Earnings per diluted share could rise as much as 46 percent to 35 cents per share, according to market watchers. Still, some insiders have been cautious about the company, suggesting that rebound signals during the robust holiday quarter could be misleading. (Macy’s was among the first in its class to unveil aggressive store closures and layoffs two years ago.)

Meanwhile, arguably the sector leader, Nordstrom Inc. showed some deceleration during the holiday period when its reported profits — impacted by corporate tax reform — fell 25 percent year-over-year, $151 million, or 89 cents per share. Adjusted diluted earnings per share, at $1.20, missed analyst’ bets for diluted EPS of $1.24. Net sales advanced 8.4 percent to $4.6 billion during the period, in line with analysts’ expectations. Comp sales rose 2.6 percent, topping forecasts calling for a comp gain of 1.08 percent.

The company — which has stayed ahead of the curve by being among the first to offer buy online pick up in store as well as niche concepts such as Nordstrom Local — on Thursday will report its first round of earnings since an attempt by the founding family to take the store private fell through in March.

Market watchers predict Nordstrom will post a year over year Q1 sales gain of 3 percent to $3.5 billion with profits of 44 cents per diluted share — a climb of 19 percent over the comparable period.

For its part, uneven performances have plagued J.C. Penney Co. Inc. for the better part of two years — with concepts such as its Sephora shop in shops resonating while sluggish apparel trends fell short. Like its peer Macy’s, JCPenney has opted for store closures, omnichannel advancements and new product initiatives in hopes of turning things around.

Seemingly, the company’s latest efforts to circumvent tough times were announced in March when it said it would lay off 360 workers to streamline operations. Reporting fourth-quarter results, the firm said sales during the period increased 1.8 percent to $4.03 billion, roughly in line with analysts’ forecasts. Comparable sales rose 2.6 percent, with jewelry, home, Sephora, footwear and handbags and salon serving as the top-performing divisions during the quarter.

Net income was $254 million, or 81 cents per diluted share, a gain of 32 percent over the same period last year.  (The improvement was primarily due to a $75 million tax reform benefit recorded in the fourth quarter, the company noted.)

Adjusted net income was $179 million, 57 cents per share, handily topping forecasts for adjusted diluted EPS of 47 cents per share.

When the company reports Q1 earnings on Thursday, analysts predict it will see a net loss of 2 cents per diluted share — compared with diluted earnings per share of 6 cents in the same period last year. Sales are also expected to dip 2.7 percent to $2.6 billion.

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