Kohl’s saw improvement in its profit picture, Children’s Place says its picking up Gymboree market share and Dillard’s suffered sales and earnings declines.
In a Nutshell: Kohl’s benefited from its inventory control and cost-savings initiative in the quarter, posting substantial profit gains in the period and in the first half of the year. The company, which ended the quarter with 1,154 stores, saw a slight drop in sales for the periods, but said there were encouraging signs, such as an uptick in July store traffic.
Sales: Net sales for the second quarter ended July 29 fell 1 percent to $4.14 billion from $4.18 billion in the year-ago period and were off 2 percent to $7.99 billion from $8.14 billion in the first half. Comparable store sales ticked down 0.4% in the quarter, compared with a 1.8% decrease during the same quarter a year prior.
Earnings: Net income in the quarter improved 48.6% to $208 million compared to $140 million a year earlier, and gained 74.5% to $274 million from $157 million in the six months.
CEO’s Take: Kevin Mansell, chairman, chief executive officer and president, said, “The traffic momentum that we saw in the combined March-April period accelerated in the second quarter. Though transactions for the quarter were lower than last year, July transactions increased. We are also excited by the sequential sales trend improvement in all our lines of business, all geographic regions, and in both our proprietary and national brand portfolios. Gross margin and SG&A expenses were consistent with our expectations and we are seeing benefits from our ongoing inventory initiatives and the early stages of our cost-saving initiative.”
The Children’s Place
In a Nutshell: The Children’s Place sees a market share opportunity in the recent bankruptcy of Gymboree and the liquidation of 330 of its stores. Children’s Place units are directly co-located in 216 of those locations and have experienced sales and traffic lifts in those stores since the Gymboree liquidation began on July 18. The company also said that early results for back-to-school selling have been positive.
Sales: Net sales for the second quarter ended July 29 increased 0.6% to $373.6 million from $371.4 million in the year-ago period. Comparable retail sales increased 3.1% in the three months.
Earnings: Net income was $14.3 million in the quarter compared to a net loss of $2 million the previous year. Gross profit was $128.4 million in the quarter, compared to $123.9 million last year. Operating income was $3.2 million compared to a net operating loss of $2.9 million in the second quarter of 2016.
CEO’s Take: Jane Elfers, president and CEO, said, “We continued to deliver outstanding operating results in the second quarter. Comparable retail sales, gross margin, operating margin and earnings per diluted share were above last year and exceeded the high end of our guidance range. Our results are indicative of the significant progress we have made against each of our strategic growth initiatives–superior product, business transformation through technology, global growth through alternate channels of distribution and fleet optimization…Within our digital transformation initiative, we are intensely focused on developing and implementing a robust Personalized Customer Contact Strategy.”
In a Nutshell: Dragged down by markdowns and underperforming categories, Dillard’s posted a net loss in earnings and sales in the second quarter. On the positive side, sales increased slightly in women’s apparel and were on trend in juniors’ and children’s apparel, accessories and lingerie, and men’s apparel and accessories. Sales in shoes were slightly below trend, below trend performances were noted in cosmetics and home and furniture. Sales were slightly above trend in the Eastern region, consistent with trend in the Western region and below trend in the Central region.
[Read more on Dillard’s: Dillard’s Faces Pressure to Monetize its Real Estate]
Sales: Net sales at the department store chain in the second quarter ended July 29 fell 1 percent to $1.43 billion from to $1.45 billion in the year-ago period. Total merchandise sales also decreased 1 percent in the period to $1.39 billion from $1.40 a year earlier.
Earnings: The company reported a net loss for the quarter of $17.1 million compared to net income of $12.1 million for the prior-year period. For the first half, Dillard’s reported net income fell 45 percent to $49.2 million compared to net income of $89.5 million for the prior year 26-week period.
CEO’s Take: William T. Dillard, CEO, said, “Significant markdowns led to a disappointing loss as we dealt with inventory, which was up 2 percent at quarter end.”
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