Sucharita Kodali, a retail analyst at Forrester, says the clock is ticking for department stores like Macy's Inc. and J.C. Penney Co. Inc.
On Thursday, both retailers saw a decline in sales in the same store during the key Christmas season, and both retailers saw their shares decline.
M, + 0.56%
MarketWatch confirmed on Thursday that it will close 28 locations and one Bloomingdale location in the coming weeks.
Macy's shares closed 2.2% on Thursday, while J.C. Penney
Share slumped 10.8%.
"Department stores have had very bumpy vacations over the years, and this only underlines that they are fundamentally challenged," said Kodali.
See: Macy's comparable sales improved over the holidays, but the results were still "mediocre".
"They may have a good season or two in the future, but if they don't drastically reinvent and diversify their business out of retail, or at least the business of having inventory, they can't just hope they will return Amazon accept or picking up in store will change your assets. "
KSS, + 0.46%
has a partnership with Amazon.com Inc.
to accept the returns of the e-commerce giant, but analysts say Kohls has to do more to generate sales.
Kohls recorded a 0.2% decline in sales compared to the previous quarter.
Read: Kohls needs more than an Amazon partnership to increase sales
Moody & # 39; s called the department store holidays "lukewarm".
"The sector continues to underperform as alternative channels continue to resonate with consumers and gain market share," said Christina Boni, vice president of Moody & # 39; s Investor Service. “The holiday performance suggests that department stores will have to change faster in 2020 to maintain their market position.”
For one thing, the shops could simply bring a little more into the Christmas spirit. Neil Saunders, Managing Director of GlobalData Retail, criticized in notes after the announcements by Macy and J.C. Penney both retailers alike: business wasn't fun.
"During the holiday season, many stores lacked joy and were simply not configured to trade successfully," he said in J.C. Penney. "Key categories with assortments lacked inspiration for their usual mix of bland, undifferentiated products."
While the Macy's stores that had made major investments were best dressed on vacation, others were boring.
"Most old shops, of which Macy has a very long tail, looked shabby and lacked festive cheers," said Saunders. "From our perspective, they are still not useful and there is a big question mark for their long-term future."
In future, Cowen's analysts will be more optimistic than others.
Do not miss: The goal is to take over the market share in women's clothing that Kohl is losing
"Macy's makes the right strategic changes to improve its performance," said analysts. They welcome the decision to do business.
Cowen rates Macy's stock market with a target price of $ 16.
And on J.C. Penney is "encouraged" by Cowen that vacation results were no worse.
"After a turbulent year in 2019, in which the company built up its management team, left important categories and created an attack plan, we expect the trends to improve in fiscal year 2020," said the analysts.
Cowen evaluates the J.C. Penney Stock Market with a target price of USD 1.
Still, Moody's is cautious with department stores this year. In a December 9 report, analysts cut their forecast for 2019 operating profit growth, although stabilization is expected in 2020.
"[D]Retail stores will continue to be among the worst in retail, ”said the analysts.
"Department stores will continue to operate in this highly supportive environment, with further cost reductions difficult due to continued investment and lukewarm sales growth."
Macy's stock fell 30% last year. The J.C. Penney shares fell 23.5%. The ProShares decline in the ETF retail store
rose by 0.6% over this period, while the S&P 500 index rose