Retailers Look Ahead After A Healthy Fourth Quarter

Macy's, Kohl's, JCPenney and Gap Reinforce 'Omni-Channel' Commitment

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Retailers are refreshing their marketing strategies to build on solid fourth-quarter earnings that were helped by improved consumer confidence and lower gas prices over the holidays. Kohl's is focusing on data-driven personalization and national brands, while Macy's, J.C. Penney and Gap are expanding and tweaking their omni-channel marketing.

Kohl's

Fourth-quarter sales at Kohl's were $6.3 billion, up 3.9% from the previous year, while sales for the year were flat at $19 billion, the company said in a statement on Thursday. Comparable-store sales also rose 3.7% during the quarter,the largest increase since the fourth quarter of 2010.

In early 2014, Kohl's began shifting its product focus to emphasize national brands while personalizing its marketing. The product strategy boosted sales during the quarter, and Nike, Levi's and Disney were among its top-performing brands. And the marketing approach is helping Kohl's build a roadmap based on customer data. For example, the retailer is focusing more on new shoppers (a market it previously overlooked in favor of regulars), said Chief Financial Officer Wesley McDonald.

Kohl's upped its marketing budget in the fourth quarter, with a focus on TV, to drive holiday sales and support the launch of its Yes2You Rewards loyalty program. The higher spending contributed to a 2% rise in operating expenses during the quarter.

Macy's

Macy's seemed particularly affected by a consumer shift toward discount chains from department stores. Its healthy year was tempered by an underwhelming fourth quarter, leading Macy's to restructure its marketing to boost growth this year. Same-store sales increased 2% in the fourth quarter, the company said in a statement on Tuesday, trailing its earlier forecast of as much as 3%. Same-store sales for the year were up 0.7%.

Fourth-quarter profits also fell 2.2% to $793 million, or $2.26 a share, from a year earlier. Excluding some items, the earnings were $2.44 a share in the period, which ended Jan. 31.

On a conference call, Macy's cautioned that 2015 will be a transition period for the company. In January, the department store began restructuring its marketing and merchandising to unify is messaging across shopping channels -- in-store and online -- in an effort to beef up sales, the company said.

"We reorganized our merchant and marketing organizations to make them faster, more nimble, and better-connected between the stores and the digital world," said Chief Financial Offcier Karen Hoguet.

J.C. Penney

J.C. Penney posted strong fourth-quarter and full-year earnings on Thursday, but is still recovering from failed efforts to revamp the business, which once crippled the company. Comparable-store sales grew 4.4% for both the fourth quarter and full year, the company said in a statement.

"We did a good job in 2014 of reconnecting and reengaging with tens of millions of J.C. Penney customers," said CEO Myron Ullman said in a conference call, where he also acknowledged that the retailer is in the midst of a turnaround. "We are still trying to fully recover from the self-inflicted wounds of the previous strategy."

In 2015, the retailer is eager to grow its core businesses -- women's, men's and kids apparel -- and expand its presence in the home furnishings category," said Mr. Ullman. Like other retailers, J.C. Penney is also focused on omni-channel shoppers.

Mr. Ullman pointed to the retailer's spring marketing campaign, which launched during the Academy Awards and emphasizes affordable, stylish fashions. The push uses TV, print, social and digital efforts, as well as the upcoming 120-page home furnishings catalog to reach both in-store and online buyers.

Gap

Gap Inc., the biggest apparel-focused retailer in the U.S., posted fourth-quarter profit that was higher than analysts estimated as the company's discount brand Old Navy boosted sales.

Profit excluding some items was 75 cents a share in the quarter ended Jan. 31, the San Francisco-based company said in a statement on Thursday. Sales rose 3% to $4.7 billion during the fourth-quarter, and were up 2% for the year to $16.4 billion.

CEO Art Peck, who took over the role Feb. 1, is working to revive Gap's namesake brand, continue its global expansion and improve its digital and in-store experiences. The retailer's off-price Old Navy chain has been boosting results as consumers look for discounts. Old Navy sales at stores open at least a year, including online orders, grew 11% in the most recent quarter.

"I am bullish on where we are overall as a company," Peck said on the company's conference call. "The consistency of performance that we've seen with Old Navy -- really premised on the back of season-after-season good product that is on-trend and on-brand -- gives me a good deal of confidence."

To reinforce the company's omni-channel commitment, Gap merged the marketing and e-commerce teams at its namesake brand and Banana Republic last month. The effort was meant to create a unified approach that centers on the customer.

"I'm excited about that because today the digital expression of our brand is the primary way that our customers engage our brands," said Mr. Peck. "It needs to be aspirational, holistic, emotional, in a way that few people have expressed their brands digitally."

-- Contributions from Bloomberg News --

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