Kohl’s and Macy’s are almost getting back to where they were before the pandemic hit. Unfortunately for them, the competitors are already way ahead of this.
In the quarter ended May 1, Kohl’s and Macy’s saw their net sales rebound 70% and 56%, respectively, from a year earlier, as buyers looked to refresh their outdated wardrobes. Dressier categories, including even tailored clothing, are making a comeback, Macy’s noted in its call for results on Tuesday.
The rebound was largely predictable after a dismal comparable quarter last year, when stores had to close due to Covid-19 restrictions. Comparison with pre-pandemic figures gives a more sober outlook: Measured against the same quarter in 2019, Kohl’s net sales fell 4.2%, while Macy’s comparable sales fell 10.5% .
A positive surprise was the return to profitability for the two department store giants; analysts polled by FactSet had expected a net loss of both. But that was in part thanks to factors beyond the control of retailers: Port congestion led to lower inventory in the garment industry, which led to more comprehensive sales. Inventories were down 25% at Kohl’s from a year earlier and 14% at Macy’s.
Kohl’s shares fell 10% after its announcement on Tuesday, and Macy’s is down about 5% since its report earlier in the week. Yet they are both trading at prices higher than pre-pandemic levels.