Department-store retailers JCPenney and Macy's reported weaker-than-expected sales growth for the holidays, despite an overall surge in retail spending during the period.
Macy's stores reported gangbuster sales on Black Friday, but spending growth flattened out closer to Christmas, executives said
Macy’s said same-store sales grew by 1 percent in the November–December period. “The holiday season began strong — particularly during Black Friday and the following Cyber Week — but weakened in the mid-December period and did not return to expected patterns until the week of Christmas,” said Macy’s Chairman and CEO Jeff Gennette. “In the holiday period, we saw strong performance in fine jewelry, women’s shoes, fragrance, dresses, outerwear, active and home. This sales growth was largely offset by underperformance of women’s sportswear, seasonal sleepwear, fashion jewelry, fashion watches and cosmetics.” Based on this, the company downgraded its sales growth expectations for 2019 from a slight uptick to only flat.
At JCPenney, meanwhile, holiday sales declined by 3.5 percent. CEO Jill Soltau announced plans to shutter three of the company’s 860 stores and to continue evaluating the real estate portfolio for additional closures. Management says it is assessing locations that may not meet financial targets or represent a market opportunity to capitalize on a beneficial real estate asset. Further information related to future store closings will be shared on Feb. 28, when Penney reports its fourth-quarter and fiscal 2018 results.
JCPenney CEO Jill Soltau wants to renew sales momentum and says the company intends to close 2019 with $4 billion in cash
Meanwhile, Mastercard SpendingPulse, which tracks spending online and in stores across all payment types, says its numbers show a 5.1 percent jump in retail sales between Nov. 1 and Dec. 24.
Department stores need to work harder to maintain sales momentum, in part because brands that typically have received prime placement in department stores are investing more in their own sales channels, said Stacey Widlitz, president of SW Retail Advisors, speaking to CNBC.
Macy’s and JCPenney are both investing in new technologies to help boost omni-channel sales and to offer brands some more-compelling environments. Penney said it expects to have some $4 billion in cash on hand at the end of 2019.
Kohl’s CEO Michelle Glass says she was delighted with the company’s 1.2 percent same-store sales growth for the period, though that was down from 6.9 percent a year ago. “The strong performance we achieved this holiday," she said, "reflects the compelling product offering, a great marketing strategy and consistent execution in stores and online."
By Brannon Boswell