Macy’s and Kohl’s both have excellent Christmas sales

Macy’s, Kohl’s Post Strong Results Heading Into Holidays

Macy’s and Kohl’s, both department store giants, had outstanding fiscal third-quarter earnings as customers returned to purchase gowns and other items that had fallen to the bottom of their shopping lists when the pandemic struck.

During the quarter, Macy’s and Kohl’s both turned a profit thanks to strong sales. Both corporations upped their financial projections for the year.

Macy’s and Kohl’s are among a spate of retailers reporting solid sales as they deal with rising expenses and clogged supply chains as the holiday shopping season approaches. To get goods onto shelves, they’re rerouting ships to less congested ports.

Nonetheless, Kohl’s claims that the delays have had a disproportionately negative impact on its women’s business, and the department store is striving to rectify the situation. Some of the late products may have to be packaged and used for another season, according to Kohl. Both retailers believe supply chain problems will not be fixed until later next year.

In a tight labor market, retailers like Macy’s are likewise offering greater wages and boosting benefits for their employees. The department retailer said earlier this month that new and current employees would be paid a minimum of $15 per hour by May.

On the results call, Macy’s CEO Jeff Gennette also revealed that the retailer has hired AlixPartners to assess whether it should separate its e-commerce division from its stores, similar to what Saks Fifth Avenue did earlier this year. The move comes as activist shareholder Jana Partners presses the company to spin off the segment to improve its valuation.

For the three months ending Oct. 30, Macy’s earned $239 million, or 76 cents per share. According to a FactSet survey, adjusted earnings per share were $1.23, handily beating Wall Street per-share forecasts of 31 cents.

During the same time period the previous year, the corporation lost $91 million.

Sales for the quarter totaled $5.44 billion, exceeding analyst estimates.

Stores that have been open for at least a year had a 35.6 percent increase in sales, including licensed industries such as cosmetics.

When compared to the same quarter last year, online sales jumped 19 percent, and by 49 percent when compared to the same quarter in 2019.

Home products, fragrances, jewelry, watches, and sleepwear all performed well for the company. Dresses, men’s tailored apparel, and baggage all continue to rebound.

In 2019, the New York-based corporation added 4.4 million new Macy’s customers, a 28 percent increase over the previous year.

Macy’s was able to grow inventories 19.4 percent compared to the third quarter of last year, navigating shortages and slower supplies as the US economy recovers from the pandemic’s effects.

Macy’s has announced the establishment of a third-party marketplace to broaden its product categories and brands.

Macy’s is tightening and strengthening its full-year estimate for 2021. Sales of $24.12 billion to $24.28 billion are now expected, up from a range of $23.55 billion to $23.9 billion previously. The adjusted earnings per share range are now expected to be $4.57 to $4.76, up from $3.41 to $3.75 before.

According to FactSet, analysts predicted $3.92 per share on $23.78 billion in sales.

Kohl’s, which is situated in Menomonee Falls, Wisconsin, reported a quarterly profit of $243 million, or $1.65 per share, for the three months ending Oct. 30. Last year, the company lost $12 million, or 8 cents a share, on a per-share basis.

Sales increased by 15.5 percent to $4.36 billion, with 14.7 percent growth in establishments open for at least a year.

The business increased its full-year earnings-per-share guidance to between $7.10 and $7.30 per share, up from $5.80 to $6.10 per share before. According to FactSet, analysts were anticipating $6.14 per share.

So far, the Sephora stores at Kohl’s have had a positive reception, with 25% of shoppers being new to the retailer. They’re also more diverse and younger.

Kohl’s CEO Michelle Gass noted during an earnings call with analysts that total inventory is down 25% from 2019; women’s inventory is down even more. The corporation had hoped to achieve levels below 2019 by the end of the year, but they are still lower than expected. Activewear inventory, on the other hand, is in “excellent form,” she noted, owing to high sales.

The Associated Press quoted Gass as saying that inventory delays were a “lost opportunity.” Customers are praising the general revitalization of the women’s business, which includes brands such as Lauren Conrad, she said, but “we just need more of it.”

In the Thursday afternoon trade, Macy’s stock increased by about 21%, while Kohl’s stock increased by nearly 8%.

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