Macy's and Penney Bolstered Their Sales In the Holiday Season -- WSJ
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 5, 2018).
A healthy economy and strong consumer spending gave a boost to Macy's Inc. and J.C. Penney Co., which reported sales growth for the critical holiday months.
Macy's said its same-store sales rose 1% in November and December from a year earlier, while Penney reported a 3.4% increase. The results were an improvement from a year earlier, when declines occurred at both chains. The mall anchors are the first large retailers to give investors a readout on the holiday season.
Analysts and economists have predicted that low unemployment and rising wages gave consumers at all income levels the confidence to spend this holiday season. Retailers had their best holiday sales since 2011, according to Mastercard SpendingPulse, which tracks all forms of payments in stores and online.
Both Macy's and Penney have struggled with falling sales as shoppers make fewer trips to malls and do more of their spending on smartphones. They have responded by closing weaker locations and ramping up investments in e-commerce.
"It was the first November-December increase for us since 2014," Macy's Chief Executive Jeff Gennette said in an interview. He added that the retailer's momentum has continued into 2018.
Not all chains are faring better. Sears Holdings Corp. plans to shut more than 100 stores in the next few months after a yearslong sales decline. The 64 Kmart stores and 39 Sears stores will close in March and April, the company said Thursday.
Sears's problems are benefitting some of its rivals. "We had over 30% growth in appliances, and we think that market share is coming from Sears," Penney CEO Marvin Ellison said in an interview.
On Thursday, Macy's said it would close 11 stores earlier than planned this year. They were part of about 100 closures the company had announced in August 2016. Macy's also intends to reduce or increase the number of employees in different stores.
Mr. Ellison said Penney wasn't planning any significant store closings this year.
After weak sales last holiday season, Macy's announced plans to cut 10,000 jobs and Penney unveiled plans to close 138 stores and offer buyouts to 6,000 workers.
On Thursday, Macy's raised its adjusted earnings guidance for fiscal year 2017 to be between $3.59 and $3.69 a share given the effect tax reform will have on the company's yearly tax rate. The retailer said it expects total sales during the 2017 fiscal year to fall between 3.6% and 3.9%.
Neil Saunders, a managing director of research firm GlobalData Retail, said that while the positive results at Macy's were a welcome change from the sales declines it has been posting, he cautioned that the retailer's growth is still weak and that it is likely losing share to other competitors.
"These results are a step in the right direction, but Macy's has a very long journey ahead of it before it can declare itself to be on the path to prosperity," Mr. Saunders wrote in a note to clients.
Penney said it was reaffirming its previous financial targets, which include a forecast of fiscal 2017 comparable sales that will be flat to down 1% from a year earlier.
"Consumer confidence is high, unemployment is low and we think the new tax legislation will benefit our core customers," Mr. Ellison said. "That should lead to positive sales growth in 2018."
After rallying in recent weeks, the shares of Macy's and Penney slipped Thursday. Macy's shares closed off 3.3%, or 84 cents, to $24.49. Penney shares fell one cent to $3.69.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
January 05, 2018 02:47 ET (07:47 GMT)