Kohl's, Macy's say store traffic improving

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Kohl’s (KSS) and Macy’s (M) reported on Thursday another quarter of weaker sales, but the results weren’t as bad as expected thanks to improved store traffic.

Retailers including Kohl’s, Macy’s and J.C. Penney (JCP) have closed stores and cut costs during a period of declining sales. Stores have struggled to compete with e-commerce rivals such as Amazon.com (AMZN) with more consumers shopping online.

In its fiscal second quarter ending July 29, Kohl’s logged a sixth straight period of negative comparable sales, which fell 0.4%. However, analysts were looking for a steeper loss of 1.5%. Macy’s had a similar story. Sales at Macy’s stores open at least a year slipped 2.5%, better than the average estimate of a 3% drop.

Kohl’s has seen a shift in traffic trends since the start of 2017, executives said during the retailer’s earnings call. Traffic momentum in March and April accelerated into July, when Kohl’s posted an increase in monthly transactions year-over-year. The Wisconsin-based retailer added that sales have climbed from one quarter to the next, also indicating positive momentum.

“Driving traffic is the single biggest priority for the company,” CEO Kevin Mansell told analysts on the conference call.

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Mansell said activewear brands like Nike (NKE), Under Armour (UA) and Adidas were positive sellers during the quarter. He noted that Nike, the most popular brand in Kohl’s stores, has increased sales even after the company added Under Armour to its sports apparel.

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Kohl’s reported a 48% jump in quarterly profit. In the same period last year, Kohl’s recorded a one-time charge of $128 million related to store closures and other items.

Kohl’s, which closed 19 stores in 2016, doesn’t expect another wave of closures beyond the normal turnover for individual stores.

“You should not expect anything about store closures this year,” CEO Kevin Mansell told analysts on a conference call.

Kohl’s second-quarter net sales dropped 1% to $4.14 billion, matching estimates. Macy’s booked net sales of $5.55 billion, down 5.4% but better than the consensus estimate of $5.52 billion.

Macy’s executives said they are focused on increasing traffic in stores and online, particularly for the busy holiday shopping period.

Shares of Kohl’s dropped 7.1% in recent trading. Macy’s retreated 9%.

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