Meanwhile Macy’s got whacked as comparable sales declined 6.1 percent in 1Q
In a statement Thursday, Kohl’s CEO Kevin Mansell acknowledged the challenges but said the retailer had to sacrifice profits in order to move excess inventory, and that it’s cost-cutting measures are paying off.
“First quarter sales were challenging,” Mansell said. “Despite the sales environment, we were able to manage our gross margin and inventory levels consistent with our expectations as we took the markdowns necessary to clear excess inventory. We managed our expenses effectively throughout the quarter as every area contributed to our savings versus our plan.”
Graja expects the “My Macy’s” initiative to have continued success. The initiative, which involves tailoring service, marketing, and merchandise to fit the needs and preferences of local markets, has mostly exceeded expectations, and “we expect further benefits going forward.”
Macy’s is also investing into improving its multichannel selling capabilities. “We believe this will be an important source of future growth, and note that it also helps the company to manage inventory more efficiently,” the analyst wrote. He added that the company is likely to develop new merchandise and store formats to drive additional growth.
Issues That Need Addressing
Although management is making good strategic decisions, the issues facing Macy’s include soft brick-and-mortar mall traffic, the strong US dollar and a weaker Chinese economy, which is exerting pressure on spending by tourists.