Macy’s, Kohl’s post strong results ahead of holidays
NEW YORK — Department store chains Macy’s and Kohl’s delivered strong results for the fiscal third quarter as shoppers go back to buying dresses and other goods that fell to the bottom of the shopping list when the pandemic struck.
Earnings at Macy’s and Kohl’s, who have multiple locations in the region, swung to a profit during the quarter as sales surged. Both companies raised their annual financial outlooks.
Macy’s and Kohl’s join a slew of other retailers posting strong sales as they grapple with surging costs and snarled supply chains heading into the holiday shopping season. They’re rerouting shipping to less congested ports to get goods onto shelves. Still, Kohl’s said the delays have disproportionately affected its women’s business, and the department store is working to address the issue. Kohl’s said some of the late merchandise may have to be packed up and used for another season. Both retailers said they don’t think supply chain issues will be resolved until later next year.
Retailers like Macy’s are also paying higher wages and expanding benefits for its workers amid a tight labor market. Earlier this month, the department store said that it would a pay minimum of $15 per hour for new and current workers by May.
Macy’s CEO Jeff Gennette also told investors on its earnings call that it has hired consulting firm AlixPartners to evaluate whether the retailer should spin off its e-commerce division from its stores, similar to what Saks Fifth Avenue did earlier this year. The move comes as it is under pressure from activist shareholder Jana Partners to split off the division to create better valuation.
Macy’s, based in New York, earned $239 million, or 76 cents per share, for the three-month period ended Oct. 30. Adjusted earnings were $1.23 per share, easily topping Wall Street pershare projections of 31 cents, according to a survey by FactSet.
The company lost $91 million last year during the same period.
Sales reached $5.44 billion for the quarter, also topping analyst expectations. Sales at stores opened at least a year rose 35.6%, including licensed businesses like cosmetics. Online sales increased 19% compared from the year-ago period, and rose 49% compared with the same quarter in 2019.
Kohl’s, based in Menomonee Falls, Wisconsin, said it earned $243 million, or $1.65 per share, for the three-month period ended Oct. 30. That compares with a loss of $12 million, or 8 cents per share, last year.
Sales rose 15.5% to $4.36 billion, and sales at stores opened at least a year rose 14.7%.
The company raised its full-year earnings-per-share guidance to between $7.10 and $7.30, up from its previous forecast of $5.80 per share to $6.10 per share. Analysts were expecting $6.14 per share, according to FactSet.
The launch of Sephora shops at Kohl’s is getting a good response so far, with 25% of those customers new to the retailer. They are also younger and more diverse.