Macy’s, Kohl’s, Gap earnings point to cloudy holiday retail picture

NEW YORK — Results from Macy’s, Kohl’s and Gap late last week further underscored the cloudy picture for U.S. retailers heading into the start of the holiday season.

Coming after Target reported a sharp drop in quarterly profits, it’s clear that inflation-hit shoppers in the last few weeks were waiting for deals and not willing to pay full price for purchases they could put off. The big question will be if U.S. consumers will spend more freely in the coming weeks.

“I think everybody believes that Christmas

will come, but I don’t think anybody out there knows for sure exactly what’s going to happen,” Kohl’s chairman Peter Boneparth said.

Macy’s on Thursday reported that its profit and sales slid in the third quarter. Yet, the New York company topped Wall Street expectations and raised its earnings outlook, in part due to better credit card revenue. Its stock rose more than 15% Thursday.

Shares of rival Kohl’s rose 5% even after it withdrew its annual earnings outlook amid volatile spending, an uncertain economic environment and a CEO transition. Like Macy’s,

it reported a drop in sales and profit but beat Wall Street expectations.

Struggling Gap Inc. reported betterthan-expected sales results Thursday. The San Francisco-based chain, which operates stores under its namesake, Banana Republic, Old Navy and Athleta, swung to a profit from a loss a year ago, and sales rose 2%.

But it also delivered a tempered holiday outlook.

Target, Macy’s and Kohl’s all noted a slowdown in spending in the last few weeks as the kickoff to the holiday shopping season approaches, which could force retailers to cut prices even further.

One exception was Walmart, which has a more robust grocery aisle and is the nation’s largest retailer, reported better-than-expected earnings and raised its earnings outlook.

“Visibility for the fourth quarter has been as difficult as any period I can remember,” Boneparth told analysts on a call Thursday. He noted the situation a year ago, when retailers were dealing with supply-chain snarls.

“You had last year a situation where nobody had inventory,” he said. “All customers were inclined to buy early. Now, we flip over, everybody has a lot of inventory.”