Retailers Turn In Mixed Q1 Results, Say Woes Aren't Caused By Tariffs
Last month, Amazon reported strong first-quarter returns, with total revenue up 16.9% year over year. Now other retailers are releasing earnings reports, and the picture for them is mixed or even bad, though at least they say they aren't being impacted adversely by tariffs on Chinese goods.
Nordstrom experienced a 3.4% drop in total revenue compared with a year earlier, with comp-store sales down 3.5%.
"During the first quarter, we had some executional misses with the customer experience," Nordstrom co-President Erik Nordstrom said during his company's most recent earnings call.
"That had an impact on sales ... both in stores and online. We know we disappointed our customers and we own it."
J.C. Penney suffered a drop in total revenue of 4.3% year over year, with comp-store sales off 5.5% compared with the same period in 2018.
The poor showing for the quarter was not because of tariffs, according to J.C. Penney CEO Jill Soltau.
"There is a minimal impact on our business resulting from the three tariff tranches that went into effect last year, including the recent increase ... which increased tariffs from 10% to 25%," she said during the company's Q1 earnings call.
Kohl's Q1 earnings were also disappointing. Total revenue was off 2.9% during Q1, and comparable sales dropped 3.4%.
The anticipated positive impact of Kohl's partnership with Amazon, which allows Amazon customers to return items at Kohl's stores, apparently hasn't materialized yet.
Kohl's CEO Michelle Gass said during the company's earnings call that the deal with Amazon would eventually help the company, however.
"We are incredibly excited about the nationwide rollout of the Amazon Returns program, which we expect to be a significant traffic driver to our stores," she said.
Department stores will need to do more to drive traffic, considering the sector's chronic problems. According to the Census Bureau, year-over-year sales for the sector were down 3% in April, the latest negative showing of many for the sector.
Best Buy experienced annual comp-store sales growth of 1.3%, spurred by demand in wearable devices, tablets and appliances. Comparable online sales were up 14.5%.
During Best Buy's most recent earnings report, company CEO Hubert Joly said the impact of tariffs has been minimal.
"So far, we have been able to minimize the impact of these tariffs by employing a number of mitigation strategies, including by buying products ahead of the tariffs being implemented, and by working with our vendors," Joly said.
He also attributed the low impact to the limited number of consumer items on the tariff list.
Despite the recent weakness of L Brands' Victoria Secret brand, the company also turned in a good first-quarter report, mainly on the strength of Bath & Body Works.
First quarter comp-store sales for L Brands declined 5% at its Victoria’s Secret segment compared with a year ago, but increased 13% at Bath & Body Works.
Sales growth at home improvement stores has been relatively weak recently — the Census Bureau put growth at 1.2% year over year in April — and a wet spring in much of the nation could have hampered home improvement activity, but Home Depot had a good quarter anyway.
Home Depot enjoyed a same-store sales increase of 2.5% globally and 3% in the United States during the first quarter.
"If you ignore the weather and lumber prices, comps would have been closer to 4.5%," Home Depot Chief Financial Officer Carol Tomé said during the company's most recent earnings call.
Regarding the impact of tariffs on its business, Executive Vice President of Merchandising Ted Decker called it manageable.
"Should these new tariffs hold, it will be an incremental $1B," Decker said. "So call it less than 1% of our total sales. It'll certainly be more acute in certain categories ... 1% in aggregate of sales [would be] a little harder to manage, but still I would call [it] a manageable category."