33 minutes ago | By Sandra Halliday
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The US holiday retail season was an interesting one for heritage US department stores and Americana fashion brands. The early results are in when it comes to retail sales, here’s what you need to know:
First up, the good. It was surprisingly good news for Gap Inc, as it reported a same-store sales rise in December. As expected, analysts had inked in another decline. Its shares rose almost 9% in aftermarket trade.
Gap Inc’s total net sales for the five-week period rose 3% to $2.07bn and its comp sales rose 4% almost reversing last year’s 5% decline.
That said, it wasn’t all good news as Banana Republic continued on its long-established downward trend last month. That was countered by another sterling performance from Old Navy.
Outgoing CFO Sabrina Simmons was upbeat, focusing on the two brand successes last month: “We’re pleased with the improved momentum we saw over the Holiday season, driven primarily by a positive customer response at Gap and Old Navy,” she said. “Based on these results, we now expect full-year adjusted earnings per share to be modestly above the high end of our previous adjusted guidance range of $1.92.”
More good news from American Eagle too (though more moderate success than an all out win). American Eagle Outfitters said Thursday its Q4 comp sales came in flat and continues to expect final quarter EPS to range $0.37-$0.39, in-line with its previous guidance.
CEO Jay Schottenstein said: “The Holiday sales season was choppy and highly promotional, but overall, I’m pleased that we are meeting many of our objectives for the quarter.”
He added: “We had a strong Thanksgiving shopping period, and despite traffic weakness in the malls leading into Christmas, our online sales for both American Eagle and Aerie were strong throughout the season… I’m confident in our prospects as we look ahead to 2017.”
The Gap report and American Eagle news was a lift from the dreary department stores news from Macy’s and Kohl’s over lacklustre Holiday sales, which added to another horror comps story from struggling Sears.
Macy’s is to slash more than 10,000 jobs as the US department store giant plans to shutter the first 68 units out of 100 closures planned with the loss of the first 3,900 jobs. The announcement follows disappointing Holiday trading.
Macy’s also cut its earnings forecast for the current fiscal year ending January 28 to a range $2.95-$3.10 from a previous estimate of $3.15- $3.40. Its shares fell almost 11% in after hours trading Wednesday.
In addition to the 68 closures, Macy’s said it also “intends to opportunistically close approximately 30 additional stores” over the next few years as leases expire or sales transactions are completed.”
CFO Karen Hoguet said the closures, expected over the next few months, would enable Macy’s to focus on its best-performing locations. Hoguet also said that Macy’s will be testing a variety of new strategies this spring.
It’s not all bad news though, a turnaround strategy is in place that puts beauty front and centre, as well as its successful off-pricing strategy. Macy’s plans to open some 50 Bluemercury stores some of which will be stand-alone locations and some shop-in-shops at Macy’s stores. It also plans to add 50 of its off-price Macy’s Backstage concept areas, located within existing stores.
Responding to this challenging shopping environment, Macy’s said it will seek to cut costs by eliminating layers of management and “making changes to the way stores are operated.”
That can’t come quick enough as Macy’s comp sales in the November/December Holiday trading period fell 2.7%.
“We believe that our performance during the Holiday season reflects the broader challenges facing much of the retail industry,” CEO Terry Lundgren, who will step down this year, said while adding he expects 2017 sales to decline at a similar rate to the Holiday performance.
Similarly, Kohl’s Corp suffered over the holidays. It slashed its 2016 profit forecasts on Wednesday, after Holiday season sales fell more than expected. Its shares plunged 15% after hours.
Kohl’s said sales were volatile throughout the Holiday season, even though it saw strong sales on Black Friday and the week before Christmas.
The retailer’s combined November/December comp sales fell 2.1% as total sales fell 2.7%. Men’s, Home and Footwear were the strongest categories while Accessories was the most challenging, it said.
Sears took the biggest retail hit. Following an alarming 12-13% fall in combined November/December comp sales, the retailer said it would close 150 stores by the end of March, including 41 Sears stores and 109 Kmart locations. That follows on from more than 200 stores it was already on track to close before the end of the current fiscal year this month.
It called the latest move “a difficult but necessary step as we take actions to strengthen the company’s operations and fund its transformation.”
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