Department-store retailers Kohl's, J.C. Penney and Nordstrom posted better-than-expected first-quarter earnings on Thursday and raised profit forecasts for the full year, citing demand for exclusive brands and designer merchandise.
"The department store is finally back," said Faith Hope Consolo, chairman of Prudential Douglas Elliman Retail Leasing. "They've had such a bad wrap for a long time."
Kohl's and J.C. Penney said brands available only at their stores helped boost results, while the higher-end Nordstrom cited strength in designer apparel.
At Kohl's, profit was $209 million, or 64 cents a share, up 25% from $167.2 million, or 48 cents a share, a year earlier. Analysts, on average, had expected 62 cents a share, according to Reuters Estimates.
Total sales at Kohl's, whose exclusive brands include Chaps clothing by Polo Ralph Lauren, rose 11.8% to $3.6 billion, while sales at stores open at least a year gained 3.9%.
J.C. Penney said earnings rose 13% to $238 million, or $1.04 a share, topping Wall Street's estimate of $1.03 a share. Penney's first-quarter sales rose 3.1%, while sales at stores open at least a year rose 2.2%.
Penney's unique brand line-up includes Liz & Co. by Liz Claiborne and its private-label Ambrielle intimate apparel.
Winning Customers
In an interview, Kohl's President Kevin Mansell said his company's business -- based on factors such as total sales and same-store sales -- was growing faster than business at Penney and Federated Department Stores.
Federated on Wednesday reported profit that missed Wall Street estimates on disappointing sales at former May stores converted to Macy's. "I think the only conclusion you can come to is that we're gaining market share," Kohl's Mansell said.
Consolo said Kohl's, like Penney, is partnering with famous names to design apparel for its stores and was poised to lure customers from Macy's. For example, Kohl's plans to launch Vera Wang-branded clothing and jewelry later this year.
"People are thinking more about Kohl's in their apparel purchases now than they've ever done," Consolo said.
Upscale retailer Nordstrom said earnings rose 19% to $156.8 million, or 60 cents a share. That was better than the 57 cents a share analysts expected.
Nordstrom sales rose 9.3% to $1.95 billion, while sales at stores open at least a year rose 9.5 percent in the quarter. The best-performing categories included designer apparel, accessories and women's apparel.
"Nordstrom knows their customer, they know their core business," Consolo said.
Kohl's and Nordstrom released results after markets closed. J.C. Penney's shares gained 5.2%, or $3.93, to $79.65 on the New York Stock Exchange, while Kohl's shares rose $2.20, or 3.1%, to $74.16. Nordstrom closed up 76 cents, or 1.5%, at $53.25.
Kohl's and Nordstrom shares have risen 8% so far this year, outperforming Penney, which is up 3%, and Federated, up 2.4 %.