The nation’s major department store chains said sales fell again in the most recent quarter as they took steps to stabilize their businesses, and analysts warn there is still more work to be done as retailers head into a crucial back-to-school season.
The one outlier in the group was Nordstrom, which on Thursday said revenue was up from a year ago, as more customers shopped online. Same-store sales — a measure of sales at locations open more than a year — also rose, about 1.7 percent, exceeding Wall Street’s expectations.
Other retailers didn’t fare so well. Macy’s and Kohl’s on Thursday said sales are still falling — albeit less quickly than before — as they fight a mounting battle to get Americans into their stores. Same-store sales were down 2.8 percent at Macy’s and 0.4 percent at Kohl’s.
“There’s been relative improvement, but this is still an uphill struggle,” said Christina Boni, an analyst for Moody’s. “The real test is yet to come, with back-to-school season and the holidays.”
Wall Street was clearly disappointed: Shares of Macy’s fell more than 10 percent on Thursday, while Kohl’s stock was down about 6 percent. (Shares of Nordstrom, however, were up about 3 percent in after-hours trading.)
Macy’s profit was up, to $113 million, compared with a year ago, at $9 million, in a quarter when the company closed stores and took other cost-cutting actions. Kohl’s profit was $208 million, up 49 percent from a year ago. Nordstrom’s profit was $110 million, down 6 percent from a year ago.
J.C. Penney releases its quarterly report Friday.
“These department stores have put forth a huge effort — but in spite of that, they’re still losing market share,” said Howard Davidowitz, chairman of the retail consulting and investment banking firm Davidowitz & Associates. “If you can’t grow long-term, there’s no way you can stay in this game.”
That game, he added, is quickly changing as Americans shun shopping malls and head online instead. Amazon is widely expected to usurp Macy’s this year as the country’s largest apparel retailer. (Jeffrey P. Bezos, the founder and chief executive of Amazon, owns The Washington Post.)
“Here’s the critical element: People are bopping around with their phones, looking for low prices, and none of them are going to Macy’s.com,” Davidowitz said. “Long-term, this just isn’t happening.”
Nordstrom, he added, could be an exception because of its successful Nordstrom Rack spinoff. During the second quarter, for example, sales at Nordstrom Rack rose 3.1 percent, compared with a 4.4 percent dip at its traditional department stores.
Nordstrom Rack also fared better on the Web: Online sales were up 27 percent on the site, compared with 20 percent at Nordstrom.com.
“Our Rack business is an important way to attract new customers to Nordstrom,” Blake Nordstrom, the company’s co-president, said on a call with analysts.
“In a day of muted results clouded by continued sales declines, Nordstrom has provided a ray of sunshine,” Neil Saunders, managing director of GlobalData, wrote in a note to clients. “Both things stand as a reminder that even in a challenging market, getting the strategy right can, and does, make all the difference.”
All the department stores are trying to build up their online businesses. Macy’s, for instance, said online sales grew by double-digits, the 32nd straight quarter it has posted such gains.
More than 300 retailers have filed for bankruptcy this year, including mall staples BCBG Max Azria, Rue21, Wet Seal and the Limited. Others, including Macy’s, Sears and Bebe, have closed hundreds of stores.
As a result, department stores have announced a number of sweeping efforts to win back shoppers.
At Macy’s, that has meant revamping the women’s shoe department and adding more fine jewelry, furniture and mattresses. But the company says it was hurt by a 9 percent drop in international tourist sales, as well as weak demand for cosmetics and housewares.
“We operate in an environment of intense and disruptive competition, and our customer has more shopping options than ever,” Jeff Gennette, chief executive of Macy’s, said in a Thursday morning call with analysts. “Winning in this environment requires us to act with a great sense of urgency.”
Kohl’s, meanwhile, said it had seen benefits from a recent partnership with Under Armour, as well as growth in its Simply Vera Vera Wang and LC Lauren Conrad brands.
“Under Armour in particular continued a very strong performance across almost all categories,” Kevin Mansell, the company’s chief executive, said on a conference call with investors on Thursday. “We’ve gained significant share in active apparel and footwear in the first half of the year and expect that to continue.”
Online sales, executives added, were up 19 percent.
“While Kohl’s sales continue to decline, these results are nevertheless rather encouraging,” Saunders wrote in a note to clients.
But, he added, “as much as these steps are positive, they are but small drops of success in a vast ocean of challenges.”