NEW YORK (AP) — A return, at least temporarily, to near normalcy is giving a boost two of America’s largest department stores hit by the pandemic last year.
Macy’s and Kohl’s raised their outlooks for 2021 Thursday after easily beating Wall Street expectations for the second quarter. Americans are again buying dresses, luggage and other goods that fell to the bottom of the priority list year last year when the pandemic struck.
“Our momentum in the first quarter accelerated in the second quarter as we successfully reengaged core customers and attracted new, younger customers with new brands and categories,” said Jeff Gennette, chairman and CEO of Macy’s, Inc.
Major retailers are rolling out quarterly earnings reports this week and the data has consistently pointed to a return to almost normal behavior for U.S. shoppers who had taken shelter over the past year. That also means that the online spending that rocketed during the pandemic is coming back down to earth.
Macy’s online sales, fell 6% during the second quarter compared with last year when they surged 53%. Still, online sales were up 45% when compared with the same stretch in 2019, before the pandemic.
However, as headlines over the past several weeks demonstrate, COVID-19 is still everywhere and there are other potential headwinds that are growing.
Retailers are now monitoring the spread of the delta variant, which has led to more mask mandates. They’re also grappling with higher prices just as the temporary government stimulus and other benefits, which helped energize spending, are fading. Snarled supply chains continue to be an issue and stores are facing labor shortages.
And prepandemic threats for traditional department stores still exist, such as alternative clothing chains like T.J. Maxx and online sellers, too. On Thursday, the Wall Street Journal reported that Amazon aims to open several large physical retail locations in the U.S. that will operate similar to department stores. It quoted unnamed sources familiar with the matter.
Former Macy’s CEO Terry Lundgren said in a CNBC interview Thursday that he’s surprised it took Amazon so long to act. He believes physical locations would cut down on the number of returns for Amazon, particularly with clothing, a huge expense.
Amazon would not comment on the Wall Street Journal report.
Still, if there was a theme that emerged in this week of retail earnings reports, it’s that the U.S. consumer is resilient.
Macy’s reported earnings of $345 million, or $1.08 per share in the three-month period ended July 31. Adjusted earnings were $1.29 per share, far above the 23 cents industry analysts had expected, according to FactSet.
Last year, Macy’s lost $431 million in the second quarter.
Revenue rose nearly 60% to $5.64 billion, better than the $5.01 billion Wall Street projected and better than last year’s $3.56 billion.
Macy’s said that it expects net sales for the year to be in the range of $23.5 billion to $23.95 billion. Its previous guidance was $21.73 billion to $22.23 billion. Industry analysts were expecting $22.09 billion. It also now expects adjusted earnings per share to be in the range of $3.41 to $3.75 per share, compared with previous projections of $1.71 to $2.12 per share.
The company also reinstated its quarterly dividend.
Macy’s announced Thursday it will have Toys R Us shops in more than 400 stores rolling out in 2022 as part of a partnership with the iconic brand’s owner WHP Global.
Kohl’s reported earnings of $382 million, or $2.48, for the three-month period ended July 31. Analysts were expecting per-share earns of $1.26. Revenue rose 31% to $4.22 billion, and was also better than expected.
Kohl’s said that annual sales are now expected to increase in the low-twenties percentage range compared with previous projections of mid-to-high teens percentage increase. Adjusted earnings per share is now expected to be in the range of $5.80 to $6.10, excluding any nonrecurring charges. That compared to the previous expectation of $3.80 to $4.20 per share.
Shares of Macy’s Inc., with headquarters in Ohio and New York City, surged 7% at the opening bell. Shares of Kohl’s Corp., based in Menomonee Falls, Wisconsin, rose 1%