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Faith Hope Consolo
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In the News

Most US department stores post weaker April sales

ATLANTA, May 10 (Reuters) - Major U.S. department-store chains posted worse-than-expected sales at existing stores on Thursday, with many saying the earlier Easter holiday and cooler weather hurt results.

Department store leaders J.C. Penney Co. , Federated Department Stores Inc. and Kohl's Corp. all posted declines in same-store sales for the month.

"We expected a better spring," said Faith Hope Consolo, chairman of Prudential Douglas Elliman Retail Leasing.

Additionally, Dillard's Inc. turned in a 14 percent same-store sales drop and Bon-Ton Stores Inc. said its same-store sales were off 15.8 percent.

Upscale chain Nordstrom Inc. posted a same-store sales rise of 3.1 percent, but that still missed analysts' average estimate of a 3.9 percent increase.

Most chains had warned that April would be a grimmer month after March sales were boosted by an earlier Easter holiday. The weaker U.S. housing market is also weighing on some department stores, with J.C. Penney saying May same-store sales were expected to be flat due to softness in home categories.

"I think department stores will gradually improve as the year progresses and people become more secure in the fact that the economy is not going to get very weak" based on lower interest rates, strong employment and general consumer confidence, Consolo said.

One exception to the April rule was luxury retailer Saks Inc. , which posted a better-than-expected 11.7 percent rise in same-store sales as consumers bought Chanel, Fendi and other higher-end brands.

For Saks, which is upgrading its technology and renovating older Saks Fifth Avenue outlets, analysts had on average forecast a rise of 6.7 percent in April same-store sales.

"Saks has had some great performance because they've gone back to their core business, revisited who their customer is and re-merchandised," Consolo said.

MISSING THE MARK

For Federated, the parent of Macy's and Bloomingdale's, April marked the third straight month of weaker-than-expected same-store sales, and the company cited disappointment at both newer and older Macy's stores.

Federated reported a 2.2 percent fall in April sales at stores open at least a full fiscal year and said a major promotion did not produce desired results.

Analysts on average were expecting a rise of 0.8 percent for Federated, according to a Reuters poll. Federated itself had forecast April same-store sales would rise 2.5 to 4 percent.

Federated, which plans to change its name to Macy's Inc., acquired May Department Stores in 2005 and converted more than 400 May stores to the Macy's nameplate last year.

"I think they thought the (national) move to Macy's was going to be easier, more accepted by the customer and I think they've had some challenges with that," Consolo said.

Despite the weaker April results, J.C. Penney affirmed its most recent forecast for the first quarter.

On April 18, J.C. Penney told its analyst meeting that it expects quarterly profit of $1.02 a share from continuing operations, up from a previous outlook of 99 cents. Analysts on average expect profit of $1.03 per share for the period, according to Reuters Estimates.

Kohl's said it was comfortable with analysts' average estimate for profit of 62 cents a share for the first quarter that ended May 5, saying it controlled costs and improved gross margin.

Shares of Kohl's, Saks and Dillard's rose in morning trading after the results were reported, while J.C. Penney, Nordstrom and Bon-Ton shares eased. Federated was off 66 cents, or 1.5 percent, to $43.16.

 

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