Retailers are treading softly into the holiday season.

This story first appeared in the November 9, 2012 issue of WWD. Subscribe Today.

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.

Most are still gauging the consumer impact of Hurricane Sandy, which has many in New York and New Jersey focused more on clean up than Christmas. And while the presidential election left the political status quo in place, businesses now face full-on the “fiscal cliff” of automatic tax hikes and spending cuts that could push the economy back into recession.

Together, this has given retailers pause just two weeks ahead of the Black Friday kickoff of the holiday season.

RELATED STORY: WWD Earnings Tracker >>

“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.