Macy’s & Kohl’s Beat Estimates, Dillard’s Loss Surprises

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Retail Q2 earnings are trickling in, and the industry watches closely what some of the biggest have to report. Macy’s results beat out Wall Street, but a downbeat outlook still caused Macy’s shares to fall. Kohl’s Q2 came in high, while Dillard’s came in low. A look:

MACY’S:

Estimates: In Q2, a 17% profit decline to 45 cents as sales fall 6% to $5.501 billion.

Results: EPS fell 11% to 48 cents as revenue dropped 5% to $5.55 billion. Same-store sales were down 2.8% on owned basis, and down 2.5% on owned plus licensed basis, better than Consensus Metrix estimates for a 3.5% and 3% decline, respectively.

Outlook: Macy’s still sees full-year EPS of $2.90-$3.15 with sales dropping 3.2%-4.3% and comp sales on an owned basis to decline 2.2%-3.3% and comps on an owned plus licensed basis to decline 2%-3%.

Stock: Shares plunged 9.8% to 20.78 in afternoon trade in the stock market today, hitting their lowest levels since September 2010. Macy’s previous earnings report in May sent shares spiraling 17% in one session.

“We saw a notable contribution from the full execution of our new women’s shoe and jewelry models and the continued successful testing of Backstage in store,” said Jeff Gennette, Macy’s president and chief executive officer.

Gennette also expressed excitement about Fall, including “the launch of a new loyalty program and the new marketing strategy, which we anticipate will further improve our sales trend in the back half of the year.”

Looking ahead to the full year, Macy’s still expects YOY comparable sales to decline by 2.2% to 3.3%. Total sales are expected to be down by 3.2% to 4.3%, and earnings and expected to fall within $3.37 and $3.62 per share. This outlook remains in line with analysts’ expectations, according to a survey by StreetAccount.

“Positively, the ebbing sales tide has … slowed at a time when some of Macy’s long talked about strategic initiatives are finally coming into play,” GlobalData Retail Managing Director Neil Saunders wrote in a note to clients as reported by CNBC. “After a torrid opening quarter, Macy’s second quarter numbers come as a relief.”

To ratchet up profitability and reduce expenses, Macy’s is scrutinizing what’s working and shutting down what isn’t. During Q2, Macy’s opened 16 free-standing Bluemercury stores and 12 Macy’s Backstage stores within existing Macy’s stores. Macy’s is also in the midst of closing 100 full-line stores due to their declining profitability. The company said it plans to invest in its “highest-potential locations” and move “more aggressively in digital and mobile.”

“We are working with a mindset of continuous improvement and will adapt our business in order to reach our goal of stabilizing the brick-and-mortar business while investing for accelerated growth in digital and mobile,” says Gennette. “Key to this strategy is engaging our customers with an improved experience that includes more elevated and exclusive assortments, a better integration of technology both online and in the store, and additional enhancements intended to drive traffic and sales.”

KOHL’S, DILLARD’S

Other retailers that reported Q2 earnings today were Kohl’s and Dillard’s, with mixed results:

KOHL’S

Estimates: Profit down 3% to $1.19 a share on a sales dip to $4.138 billion.

Results: Earnings per share rose 2% to $1.24 a share as sales came in at $4.144 billion, down 0.9%. Same-store sales dipped 0.4% vs. Consensus Metric views for a 1.5% comp slide.

Stock: Shares tumbled 6.9% intraday despite the better-than-expected results. Kohl’s is testing its 50-day line a day after undercutting its 200-day moving average.

DILLARD’S

Estimates: EPS to sink 40% to 21 cents as sales fall 4% to $1.430 billion.

Results: Per-share loss of 58 cents on sales of $1.427 billion. Same-store sales fell 1%.

“Significant markdowns led to a disappointing loss as we dealt with inventory, which was up 2% at quarter end,” said CEO William Dillard in a statement.

Stock: Shares crashed 18.1% intraday.

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