Leaky Boats

Even Macy's and JC Penney Enjoy a Rising Retail Tide

Holiday sales were strong, but the chains haven't solved their problems yet.
Photographer: Chris Hondros/Getty Images
J.C. PENNEY CO INC
+0.03
At Closing, January 17th
3.89 USD
MACY'S INC
+0.32
At Closing, January 17th
26.24 USD

Call it a Christmas miracle. Macy's Inc. and J.C. Penney Co. Inc. -- two troubled department-store chains that have been emblems of the so-called retail apocalypse -- rang up healthy sales results this holiday season.

Macy's said Thursday that its comparable sales for November and December were up 1 percent over a year earlier, a welcome turnabout for a company that has posted 11 consecutive quarters of declines on this measure.

Rough Going

Macy's holiday-season comparable sales growth looks especially good when you consider its long pattern of quarterly declines on this measure

Source: Bloomberg

J.C. Penney, meanwhile, reported a 3.4 percent comparable sales increase over last year for the nine-week period that ended December 30. 

The improvement seemed to be broad-based across various departments, a good sign for both retailers. Macy's said top performers included active apparel, shoes, and coats, while J.C. Penney called out strength in its home, beauty and fine jewelry categories.

The department-store sector has been perhaps the gloomiest corner of the retail industry in recent years, so kudos to these chains for showing they've still got some fight in them.

The Death of the Department Store

That said, I get why investors aren't sending either stock soaring on these results. And that's because I suspect the growth doesn't exactly reflect fresh strategic genius on the part of either company.

Sales figures are still being tallied and published, but we've gotten signals the retail industry overall probably had its best Christmas season in a long time, thanks to upbeat consumers. A rising tide likely lifted all boats, including those of Macy's and J.C. Penney.

These retailers will need to show they can deliver growth consistently if they want to convince investors they're not just drafting off wider industry strength.

It's also worth noting that neither chain indicated Thursday it is planning any new store closings. (Macy's said it would close 11 stores, but those were part of a plan it announced more than a year ago to shut 100 locations.) January is often when retailers announce fleet-prunings for the year ahead. For now, it seems, neither chain has such plans for 2018.

As I've previously noted, Macy's has wisely been more proactive than its rivals about trimming its brick-and-mortar footprint.

No Sacred Cows

Macy's has been more proactive about closing stores than some of its competitors

Source: Company Filings

*Macy's data is for Macy's only, not Bloomingdale's.

But it may yet need to cut deeper. J.C. Penney, meanwhile, is reinforcing the notion it still hasn't come to grips with how out-of-sync its huge store portfolio is with the digital era.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Sarah Halzack in Washington at shalzack@bloomberg.net

    To contact the editor responsible for this story:
    Mark Gongloff at mgongloff1@bloomberg.net

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