Retailers are treading softly into the holiday season.
Third-quarter results from Nordstrom Inc., Dillard’s Inc. and Kohl’s Corp. on Thursday and Macy’s Inc. on Wednesday showed chains that gained ground over the last few months, but are forced to feel their way forward.
“All the outlooks have been kind of conservative,” said Christine Chen, senior investment analyst for global consumer firms at Ashfield Capital Partners, citing both Sandy and the fiscal cliff.
Kohl’s third-quarter profits inched up 1.9 percent to $215 million, or 91 cents a diluted share — 3 cents better than analysts projected — but the retailer issued a holiday outlook that disappointed Wall Street.
Kohl’s projected earnings of $2 to $2.08 a share, below the $2.16 analysts expected, sending its stock down 5.1 percent to $51.55.
That guidance was impacted by Sandy. Kohl’s was forced to close 200 doors on the first day of the storm, and while the stores were able to reopen relatively quickly, the first week of this month was dramatically impacted. One store, in Brooklyn, N.Y., will remain closed through at least the fourth quarter.
Department stores in general now appear to be better prepared for shocks such as Sandy and the fiscal cliff worries.
Companies in the sector have worked hard to provide better service in their stores, a more differentiated product offering and spent on technology to integrate the store and the Web.
“The department stores are kind of taking the lead in making that technology and omnichannel work,” Chen said. “After years and years of losing share to specialty [stores], they finally had to do something.”
Department stores have also learned to do more with less inventory, stressing efficiency in their supply chains while also holding back some, not wanting to get too far ahead of the consumer. September apparel and textile imports showed this caution.
Kohl’s, however, is bucking the trend and stocking up. The firm’s inventories at the end of the third quarter were up 16.7 percent versus a year ago. “We have made noticeable investments in holiday inventory — both in depth and content — and the in-store experience,” said Kevin Mansell, chairman, president and chief executive officer. “Our stores are festive and fun to shop.”
Competition should be fierce for the rest of the year as stores try to attract distracted shoppers. Gap Inc. said it will have 1,000 stores open on Thanksgiving Day and Wal-Mart is offering special sales beginning 8 p.m. that night.
“Many retailers have already started hard and deep price discounting, and a significant number of chain stores are planning on opening their doors on Thanksgiving Day,” said Chris Christopher, U.S. economist at IHS Global Insight. The forecasting group predicted total holiday sales would rise 4.5 percent, a slowdown versus the last couple years.
“The real game changer this holiday season will be the increasing role that e-commerce retail sales will play during the holiday shopping season,” Christopher said.
Nordstrom Inc. has been a leader in the e-commerce game and its third-quarter profits rose 15 percent to $146 million, or 71 cents a diluted share — solid growth that was nonetheless 1 cent below Wall Street estimates. Word of the miss sent shares of the company down 2.5 percent to $55.40 in aftermarket trading.
Nordstrom’s revenues rose 13.3 percent with a 38 percent gain in e-commerce sales.
“We’re in a period where there’s a tremendous amount of change and evolution in the way technology is affecting the customer experience,” said Michael Koppel, chief financial officer. “And we want to be an exemplar there and we’re going to continue to invest to assure that we don’t lose that status.”
Dillard’s Inc., which is fashioning itself as a Southern Nordstrom of sorts, showed dramatic growth in the quarter. Stripping away one-time items, in particular a big tax credit a year ago, quarterly profits jumped 79.4 percent to $46.1 million, or 96 cents a share.
Dillard’s shares were a rare gainer in the markets Thursday, rising 3.9 percent to $83.95.
Matthew Boss, an analyst at J.P. Morgan, said Dillard’s transformation was “firmly on track” with new brands such as Under Armour, Michael Kors and True Religion added to the mix and improvements in cosmetics and home goods.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty