US mall retailers hit by declining holiday sales
The persistent difficulties facing America’s mall-based retailers were demonstrated on Thursday when several of the biggest names in the sector reported falling sales over the crucial holiday trading period.
Like-for-like sales at JCPenney, which operates 850 stores and is an anchor tenant at shopping malls across the country, dropped 7.5 per cent year-on-year over the nine-week period to the start of January.
While JCPenney reaffirmed its guidance for the full year, including for a like-for-like sales drop between 7 and 8 per cent, it shares fell more than 11 per cent, bringing the decline for the past three years to 85 per cent.
“JCPenney’s holiday numbers have more gloom than the grinch,” said Neil Saunders, managing director of GlobalData’s retail division.
Kohl’s, which analysts had hoped would manage to improve revenues during the festive season, reported a 0.2 per cent decline in like-for-like sales from a year ago, sending shares in the S&P 500 company down 9 per cent.
The disappointing performance at Kohl’s prompted the company to say it now expected full-year diluted earnings to be “at the low end” of its previously announced guidance range, of between $4.75 and $4.95 per share.
Michelle Gass, Kohl’s chief executive, said momentum in some areas including beauty and the children’s department had been offset by “softness” in womenswear. The company was “working with speed” on a turnround, she said.
At L Brands, which has struggled to adapt to shifting consumer attitudes to lingerie, like-for-like sales dipped 3 per cent in the nine weeks to the start of January.
L Brands also reduced its outlook, saying it expected to produce fourth-quarter earnings of about $1.85 per share compared with previous guidance of about $2. Wall Street took the latest decline in its stride as shares in L Brands ticked up 2 per cent. They have lost 70 per cent over the past three years.
The latest figures show how many mall-based clothing outlets and department stores are struggling even though overall consumer spending remains robust. Analysts were cautious about drawing conclusions about the wider sector based on them.
Companies coping better with the retail upheaval, such as Target and Walmart, had yet to disclose how they had performed over the holiday season, noted Mr Saunders.
“There’s a real weakness in some of the results coming out,” he said. “But what we haven’t seen is the pockets of retail that are naturally stronger.”
The updates came a day after homeware retailer Bed Bath & Beyond scrapped its full-year financial guidance and warned it expected sales and profitability “to remain pressured”.
Macy’s, meanwhile, set out plans to shut almost 30 stores and disclosed a sales decline, although it was less steep than analysts feared.