J.C. Penney and Kohl’s Struggle in Fiscal 1st Quarter
NEW YORK (AP) — J.C. Penney and Kohl's struggled during the start of the year, raising concern about the challenges for the department store industry ahead.
Penney reported a wider than expected loss and sales declines during the first quarter while Kohl's cut its fiscal 2020 profit outlook as it struggled with slumping sales in the quarter.
Meanwhile, Home Depot reported better than expected profit and revenue for the first quarter despite a damp start to 2019. That inclement weather and an extra week in the previous fiscal year dragged down the home improvement retailer's comparable store sales.
The downbeat reports from the mid-priced department stores, announced Tuesday, were in contrast to Macy's performance, reported last week. Macy's first-quarter profit smashed Wall Street estimates. Macy's also put up its sixth consecutive quarter of increases in comparable store sales — or sales in stores open a year — fueled by its robust online business after a three-year sales slump. But it also said that President Trump's escalating trade war could mean higher prices for Macy's customers.
Department stores have been trying to reinvent themselves as more shoppers go online. They've also been hurt by increasing competition from the likes of T.J. Maxx and other off-price stores, which offer coveted brands at discount prices. So, retailers have been offering more exclusive merchandise and expanding online services. Last month, Kohl's said it was expanding is partnership with Amazon, with plans to accept Amazon returns in all of its 1,150 stores starting in July. But apparently, those efforts didn't translate to higher sales.
"The year has started off slower than we'd like, with our first quarter sales coming in below our expectation," said Michelle Gass, Kohl's CEO in a statement. "We are actively addressing the opportunities that impacted our first quarter sales, and we have strong initiatives that will enhance our sales performance in the second half."
Penney, meanwhile, has been struggling for several years and is still trying to claw its way back after a disastrous reinvention plan in 2012 by its former CEO Ron Johnson.
J.C. Penney Co. reported a quarterly loss of $154 million, or 48 cents per share. Losses, adjusted for one-time gains and costs, came to 46 cents per share. That's worse than the per share loss of 39 cents Wall Street was expecting, according to a survey by Zacks Investment Research.
The Plano, Texas-based company's revenue was $2.56 billion, down 5.6%. Same-store sales fell 5.5%. The company attributed part of the sales drop to its move to get rid of major appliances and furniture, which were eating away at profit margins.
Kohl's Corp., based in Menomonee Falls, Wisconsin, reported fiscal first-quarter net income of $62 million, or 38 cents per share.
Earnings, adjusted for asset impairment costs, came to 61 cents per share, missing the average Street estimate of 67 cents per share.
The department store operator posted revenue of $4.09 billion in the period, also falling short of forecasts of $4.2 billion.
Kohl's now expects full-year earnings per share earnings in the range of $5.15 to $5.45, down from a previous range of $5.80 to $6.15. Analysts expect $6.03 per share for the year, according to FactSet estimates.
Kohl's shares tumbled more than 9%, or $5.62, to $57.29 in premarket trading, while J.C. Penney's shares fell down more than 8%, or 10 cents, to $1.05 per share.