Kohl’s, Macy’s reporting not-so-happy holiday sales

Retail performance sluggish as shoppers migrate to online

More evidence of the struggles of department store retailers emerged Wednesday, as both Kohl’s and Macy’s reported downbeat holiday results, and Macy’s identified 68 stores it plans to close.

Among the Macy’s locations to be shuttered are the store in the Valley View Mall in La Crosse, and the store in Eau Claire’s Oakwood Mall. The Eau Claire closing was announced earlier.

Meanwhile, Macy’s and Kohl’s said their November and December sales dipped from 2015 levels. Macy’s sales fell 2.1% on a comparable basis, which disregards results from stores not open for a full year. At Kohl’s, comparable sales also dropped by 2.1%.

With the disappointing holiday results, Kohl’s lowered its estimate of earnings for the full year, and not for the first time.

The company began 2016 projecting it would earn $4.05 to $4.25 a share for the year. In August, it reduced the estimate to $3.80 to $4. Now, Kohl’s expects its 2016 earnings to come in at $3.60 to $3.65 a share.

That performance, and the results Macy’s reported, underscores the hard times department stores face as shoppers migrate online and to discounters.

Overall, spending at retailers

6.1% Decline in those who shopped at department stores in the Christmas season. 15.6% Increase in those who shopped at online retailers during that season. SOURCE: CONLUMINO, A RESEARCH FIRM

this Christmas rose a solid 3.8%, the strongest growth since 2011, research firm Conlumino said. But the general gains didn’t lift department stores, which saw their share of shoppers fall by 6.1%, while the share shopping at onlineonly retailers jumped 15.6%, and the share at off-price

stores rose 7.8%.

The stores Macy’s said it will close are among about 100 it plans to shed. One analyst who follows Kohl’s thinks the Menomonee Falls-based retailer should follow suit.

“You’ve got an environment in the United States that’s over-stored,” said Brian Yarbrough, a senior analyst with Edward Jones. “There’s just too many stores. There’s too many stores chasing too few buyers.”

Kohl’s sales have been essentially flat over the last four years, and, given Wednesday’s announcement, almost certainly will drop for 2016. Meanwhile, the company’s net income has shrunk more dramatically. The $673 million in profits Kohl’s booked in 2015 was down more than 40% from 2011.

As more of Kohl’s business migrates to the lessprofitable online channel, the retailer’s bottom line will be pinched further, Yarbrough said.

“I think it’s going to remain challenging,” he said. “The trends that we’re seeing right now, I don’t see those shifting the other way anytime soon.”

Kohl’s, which had 1,155 department stores as of Oct. 29, closed 18 underperforming locations last year. Yarbrough believes it should close more, as should competitor JCPenney.

Macy’s is “taking their medicine,” he said. “I just feel like the others are delaying the inevitable.”