Retail roundup: Emphasis remains on off-price

New York--The third quarter was a rough one for U.S. department stores.

Both Macy’s and Nordstrom recorded disappointing results and lowered revenue, earnings and same-store sales projections for the year. Going forward, both chains are putting their money behind the outlet store segment of their business. 

Off-price retailer Kohl’s recorded only a 1-percent increase in same-store sales due to a weak September and warm temperatures cutting into seasonal purchases, while J.C. Penney outperformed them all.

The Plano, Texas-based retailer recorded the strongest increase in same-store sales among the four chains and, though it cut its losses, the company still isn’t turning a profit. 

Highlights from each retailer’s third quarter earnings reports are below. 

Macy’s Inc.
Macy’s Chairman and CEO Terry Lundgren said he was “disappointed” with the company’s third quarter performance. He described spending by U.S. consumers as “tepid” and said international customers remain reticent to spend as well. 

Same-store sales fell 4 percent year-over-year in the period ended Oct. 31. Total sales reached $5.87 billion, down 5 percent from $6.20 billion in the third quarter last year. 

Gross margin improved slightly, from 39.2 percent to 39.8 percent. Net income fell from $217 million to $117 million. 

In the third quarter, the retailer opened only one new full-price Macy’s store, in Ponce, Puerto Rico, but rolled out five of its new off-price Macy’s Backstage stores, which just debuted this fall. In the fourth quarter, one full-price Bloomingdale’s store is slated to open, in Honolulu, along with three Bloomingdale’s Outlets and another Backstage store.

Its emphasis on the off-price channel will continue.

Macy’s announced along with its third quarter earnings that it will open about 50 Backstage stores in off-mall locations over the next two years, and in spring 2016, will open up to 10 Backstage stores within existing Macy’s stores, creating a “new hybrid store” that Macy’s said is the first of its kind in retail. 

Nordstrom Inc.
Nordstrom’s third quarter performance was below expectations, the company said.

Same store sales for the period ended Oct. 31 increased less than 1 percent year-over-year. Net sales were up 7 percent from $3.04 billion to $3.24 billion. 

Markdowns and higher occupancy costs, accrued as the company opened more stores, particularly off-price stores, ate into gross profit. Gross profit totaled $1.01 billion, or 33.9 percent of net sales, compared with 35.5 percent of net sales in the third quarter 2014.