All eyes continue to be on the department store sector when it comes to retail’s push to counter its supposed apocalypse, spawned at the height of digital disruption in 2016 and 2017.
As two of its largest players — Macy’s Inc. and Nordstrom Inc. — ready their third-quarter earnings release this week, the waters across the industry are markedly more settled. (For the most part, that stability can be credited to digital now serving as less of a disruptor and more of an incorporated reality for many retailers.)
For Macy’s, which showed continued recovery signs in Q2 when it topped profit forecasts, a heightened focus on omnichannel and better inventory management have been key to its turnaround (so far) following a period of struggles. When it reported in August, it said it earned $185 million, or 59 cents per share, easily beating the consensus estimate of 51 cents per share. Still, sales aren’t quite soaring just yet — they were down a modest 1 percent to $5.6 billion.
On Wednesday, when the department store reports Q3 earnings, analysts expect its profits to have dipped about 39 percent to 14 cents per share as sales edge up 2.4 percent to $5.41 billion. But looking ahead, as it forges ahead with a plan to bring digital-first brands to its stores via a partnership with Facebook, among other digital-savvy initiatives, Macy’s is expected to reap more rewards this holiday season.
Watch on FN
Meanwhile, Nordstrom, thanks to its longtime focus on service and its role in pioneering omnichannel strategy in the sector, has been widely heralded as the department store leader in sidestepping the retail apocalypse.
The firm, which moved on quickly from a failed go-private effort this year, is expected to have a decent third quarter. Gains won’t be as robust as those of Q2 — reported in August — when it put up sales growth of 7 percent to $4.07 billion, besting analysts’ estimates of $3.96 billion. Q2 profits — undoubtedly helped by the firm’s mega anniversary sale during the period — had also soared past bets, landing at 95 cents per diluted share, compared with the 84 cents per diluted share analysts had expected.
On Thursday, Nordstrom — which feted its New York men’s store in April and revamped its loyalty program in October — is expected to post revenue growth of 1.8 percent to $3.69 billion as profits dip 1.5 percent to 66 cents per share.
As of 2:20 p.m. Macy’s shares were in the red 1.2 percent to $37.33. Nordstrom’s stock was down 0.8 percent to $64.95.
