WOOHOO!

US department stores are doing less terribly than expected

Obsession
Fashion
Obsession
Fashion

Major US department stores are delivering some less-bad news for a change.

Business still isn’t good—at many stores, sales are still plunging—but based on the second-quarter results announced this week by several big chains, they’re plunging less than analysts expected. Nordstrom even posted a surprise increase in sales at stores open at least a year, including 3.1% growth for its off-price chain, Nordstrom Rack.

JC Penney has been the outlier. Its 1.3% drop in same-store sales was slightly worse than anticipated, and it lost $62 million in the quarter. The company has been trying to refocus its business more on home appliances and services and less on apparel, but the efforts evidently haven’t paid off. The company’s share price fell to an all-time low today (Aug. 11).

Department stores almost across the board are in a period of turmoil as they battle the rise of e-commerce, especially Amazon, and in any case are contending with shoppers who are heading out to malls and stores less often—and usually looking for deep discounts whenever they do. Many chains have announced widespread store closures, and even more may be necessary to get their businesses to the right size for the current era.

One quarter’s worth of better-than-expected sales in the middle of the calendar year isn’t necessarily a sign that the chains are turning things around just yet. (Indeed, Macy’s shares took a drubbing after it reported results. It clearly still has a number of problems to overcome, including a drop in its important beauty business.) The months to come, as retailers compete for back-to-school and holiday sales, will tell us a lot more about the state of the US department store.

Meanwhile, a beer may be in order for some department-store executives, but nothing too fancy. And they definitely shouldn’t break out the champagne yet.

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