Executives at Macy’s estimated that hurricanes in Texas, Florida and Puerto Rico cost the company $20 million in sales in the most recent quarter, while unsold winter merchandise accounted for another $50 million in lost revenue. Nordstrom estimated a $20 million impact on sales, while Kohl’s executives said the weather accounted for about $15 million in lost revenue.
More than 100 Kohl’s stores were closed for as much as a week because of Hurricanes Harvey, Irma and Maria, and executives said the company spent about $8 million “to take care of associates” by paying them when stores were closed and making donations to the Red Cross.
“September was very weak,” Kevin Mansell, Kohl’s chairman, chief executive and president, said in a Thursday morning call with analysts. “Frankly, I attribute that completely and totally to the hurricane but also unusually warm weather. That part of the quarter really suffered as a result of both of those things.” But, he added, sales picked up in October, partly because of increased online orders and steady demand for active wear by Nike, Adidas and Under Armour.
Overall, same-store sales rose 0.1 percent at Kohl’s. They fell 0.9 percent at Nordstrom, and were down 4 percent at Macy’s, marking the 11th straight quarter of declines for the Cincinnati-based department store chain.
Winter coats, boots and accessories were among the worst sellers at Macy’s during the third quarter, chief executive Jeff Gennette said in a call with analysts on Wednesday. The best performers: fragrances and handbags, as the company cut back on promotions and offered newer items. “Supply and demand is much more in check,” Gennette said.
Profits were mixed: They rose 127 percent to $34 million at Macy’s and fell 20 percent to $117 million at Kohl’s. Nordstrom reported a profit of $114 million, compared with a $10 million loss in the same quarter last year. (J.C. Penney reports earnings on Friday.)
Wall Street reacted favorably to retailers’ hopes for the holidays. Macy’s shares rose nearly 11 percent on Thursday, while shares of Kohl’s were up about 1 percent. Shares of Nordstrom, which reported earnings after the market closed, fell more than 1 percent in after-hours trading.
So far this year, department store chains say they have cut back on inventory to avoid having to mark down unsold items at the end of the season. But those efforts may be thwarted, analysts said, if warmer temperatures persist into the holiday season.
“If we get to December and start to see 55-degree, 60-degree days again, companies will have no choices but to pull the crank on markdowns,” said Brian Yarbrough, an analyst for Edward Jones. “The fourth quarter is a big deal, and it’s all coming down to the weather.”
The last two holiday seasons, he added, were disappointing for many large retailers. Macy’s, Kohl’s, Nordstrom, J.C. Penney and Sears all reported declining sales during the last three months of 2016, as shoppers shifted their focus online. That trend is bound to continue this year, analysts say, particularly as major department store chains continue to shutter hundreds of locations.
Fourth-quarter sales figures are likely to be critical for retailers across the board, but particularly so for members of the fourth-generation Nordstrom family. After failing to find financiers, the Seattle-based company announced last month that it was shelving plans to go private until after the holidays.
“In the short term, this means one thing: They have to have a successful holiday season,” Mark Cohen, director of retail studies at Columbia Business School and former chief executive of Sears Canada, said in an interview last month. “That’s crucial if their going-private strategy is going to come off the shelf again.”
During the most recent quarter, Nordstrom reported a 5 percent decline in traffic at the physical locations of both its department stores and its off-price Nordstrom Rack locations. Online sales, however, rose 34 percent on discount sites NordstromRack.com and HauteLook, and about 8 percent at Nordstrom.com.
The company says it hopes to win over shoppers this holiday season by capitalizing on partnerships with brands like Tesla, Everlane and J. Crew. It is also offering 24-hour curbside pickup on online orders at a number of Nordstrom stores, including at Tysons Corner Center, in the run-up to Christmas.
And it’s keeping its fingers crossed that temperatures will dip in time for the holidays.
“The weather’s out of our control,” Pete Nordstrom, the company’s co-president, said in a Thursday afternoon call with investors. “But we’re preparing for it.”