By Tonya Garcia, MarketWatch
The clock is ticking for department stores like Macy’s Inc. and J.C. Penney Co. Inc., according to Sucharita Kodali, retail analyst at Forrester.
On Thursday, both retailers reported same-store sales declines during the important holiday shopping season, and both retailers saw their shares sink as a result.
Macy’s stock closed Thursday down 2.2%, while J.C. Penney /zigman2/quotes/204684963/composite JCP +2.97% stock slumped 10.8%.
“Department stores have had very bumpy holiday seasons over the years and this just highlights that they are fundamentally challenged,” said Kodali.
“They may have a good season or two in the future, but unless they drastically reinvent their businesses and diversify out of retail, or at least the business of owning inventory, they can’t just keep hoping that accepting Amazon returns or allowing in-store pickup will turn around their fortunes.”
Kohl’s Corp. /zigman2/quotes/210414114/composite KSS +20.14% has a partnership with Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +0.70% to accept returns made to the e-commerce giant, but analysts say Kohl’s has to do more to generate sales.
Kohl’s reported a 0.2% comparable-store sales decline.
Moody’s called the department stores’ holiday showing “tepid.”
“The sector continues to underperform as alternative channels continue to resonate more favorably with consumers and gain share,” said Christina Boni, vice president at Moody’s Investor Service. “Holiday performance suggests department stores will need to change more rapidly in 2020 to maintain their market position.”
For one thing, stores could simply get a bit more into the Christmas spirit. In notes following the Macy’s and J.C. Penney announcements, GlobalData Retail Managing Director Neil Saunders leveled the same criticism at both retailers: stores weren’t jolly.
“Across the holiday period, many shops lacked cheer and were just not configured for successful trading,” he said in the J.C. Penney note. “Inspiration was lacking in key categories with assortments their usual jumbled mix of insipid, undifferentiated product.”
While the Macy’s stores that have gotten key investments were dressed in their holiday best, others were dull.