US Q1 in brief – JC Penney, Foot Locker, Cato Corp
US Q1 in brief – JC Penney, Foot Locker, Cato Corp | Apparel Industry News | just-style
In the most recent first-quarter filings from US apparel and footwear brands and retailers, Walmart delivered an encouraging start to the year thanks to higher sales, while Ross Stores booked growth despite market volatility. Kate Spade, meanwhile, saw earnings slump on the back of sales declines, while Hudson's Bay recorded comparable store declines on the back of lower domestic store traffic across all banners.
Retail giant JC Penney said it saw an improvement in women's apparel, despite widening its net loss to US$180m in the first quarter, compared to net loss of $68m in the year-ago period. For the three months ended 29 April, gross margin was up 10 basis points to 36.3 %, positively impacted by improved selling margins throughout the quarter, which was partially offset by the continued growth in the company's online and major appliance businesses. Net sales meanwhile, slipped 3.7% to $2.7bn from $2.8bn last year. Comparable store sales were down 3.5% for the quarter.
CEO Marvin Ellison, said: "We continue to make encouraging progress in the company's competitive and financial position despite our top-line performance during the first quarter. While February was a very challenging month for JCPenney and broader retail, we are pleased with our comp store sales for the combined March and April period, which improved significantly versus February."
US footwear retailer Foot Locker said its first-quarter was one of the company's most profitable in its history, despite a slip in net income and falling short of its original expectations. For the period ended 29 April, net income was US$180m, compared to $191m in the year-ago period. Total sales meanwhile, increased 0.7% to $2bn, compared with sales of $1.99bn for the corresponding prior-year period. Comparable-store sales were up 0.5%, while gross margin decreased to 34% from 35% a year ago.
CEO Richard Johnson said: "The slow start we experienced in February, which we believe was largely due to the delay in income tax refunds, was unfortunately not fully offset by much stronger sales in March and April. Nonetheless, we believe our banners remain at the centre of a vibrant sneaker culture. We are confident that our customers have not lost their tremendous appetite for athletic footwear and apparel and that our position in the industry is stronger than ever."
Cato Corp reported a fall in both sales and earnings for the first quarter, with net income slipping 38% to US$22.2m from $35.9m last year. First-quarter gross margin decreased 390 basis points to 38.7%, primarily due to lower merchandise margins and deleveraging of buying and occupancy costs. Meanwhile, total sales fell to $239.7m, compared to $288m in the year-ago period. Same-store sales were also down, slipping 17%.
CEO John Cato said: ""Our negative sales trend persisted throughout the first quarter, impacting margins and earnings as we continued to work through our merchandise missteps," stated John Cato, Chairman, President, and Chief Executive Officer. "It is taking longer to work through these issues than expected and the remainder of the year will be impacted. We expect earnings for the year to be below last year."
The Buckle booked a drop in both earnings and sales in the first quarter, with the former dropping to US$16.3m from $23.1m a year earlier. Revenues were down 12.8% to $212.3m from net sales of $243.5m for the year-ago period, while comparable sales fell 12.7%. Online sales were down 7.2% to $21.8m for the 13-week period ended 29 April.
The Buckle also announced senior vice president of finance and CFO, Karen Rhoads,who joined the company in 1980, will retire later this summer. Rhoads will continue to serve as a member of the company's board of directors. The board has engaged an executive search firm to assist with the search for Rhoads' replacement.
The Bon-Ton Stores
US department store retailer The Bon-Ton Stores widened its net loss to US$57.3m in the first quarter, compared to $37.8m in the year-ago period. The York, Pennsylvania-based company saw total sales fall by 9.3% to $536.1m from $591m in the first quarter of fiscal 2016. Comparable store sales decreased 8.8% as compared with the prior year period. Meanwhile, gross margin decreased 170 basis points to 32.2% compared to last year, primarily due to an increase in the markdown rate and increased delivery expenses.
CEO Kathryn Bufano said: "Our first quarter results did not meet our expectations due primarily to weak mall traffic trends, unfavourable weather and marketing challenges associated with the Easter calendar shift."
Ross Stores booker higher sales and earnings in its first-quarter despite uncertainty and volatility in the market. Earnings reached US$321m from $291m a year earlier. Total sales were up 7% to $3.3bn, while comparable store sales grew 3%. Operating margin of 15.2% exceeded company expectations due to above-plan sales and merchandise margin. For the second quarter, the company is forecasting same store sales to be up 1% to 2%, on top of a 4% gain last year, with earnings per share of $0.73 to $0.76, up from $0.71 in the prior year period.
Stage Stores widened its net loss to US$19m from $15.5m in the first quarter as the company incurred after-tax charges primarily associated with the Gordmans acquisition of about $4m. Net sales were also down, falling 7.3% to $308.6m, compared to $332.8m in the prior year. Meanwhile, comparable sales decreased 9.6%.