Retail Earnings Review: Q4 2017

Q4 is in the books. Earnings got off to a rough start with Walmart reporting ecommerce growth below the previous quarters 60% increases but picked up steam as department store mainstays surprised with positive comps. Commentary to be updated throughout the earnings season. 

Department Stores

  • Dillards - Margin showed a decent improvement and a positive comp of 3%. Their first positive comp in several years. Despite the optimism, I believe this is a case of all boats rise with the tide.
  • Kohls - Absolute blowout of a quarter. Comp sales increase of 6% with strong margin improvement. That optimism became a bit muted once the 2018 forecast called for 0-2% increase in comp sales. 
  • Nordstrom - A positive 2.4% for full line stores in Q4 made the overall comp positive for the year. Guidance for 2018 is 0.5 to 1.5%. The next few quarters shall be interesting as Nordstrom continues to try and go private. 

Off Price

  • Nordstrom Rack - A positive comp of 3.7% brought the full year to 2.5% and accelerated from the <1% comp of last quarter.
  • TJ Maxx (Marmaxx) - The US arm of the TJX group posted a 3% positive comp. A reversal of the negative 1% posted last quarter and a match to the previous Q4. Canada now contributes $1b and Europe contributes $1.5b. as both are growing faster than the US (on a smaller base). One point of note, inventory year over year grew 16% vs. sales growing only 7% and forward guidance is only slightly up in comp sales.