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Retailers Are Hoping For A Better 2021

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Retailers Are Hoping For A Better 2021

This week, three major retailers provided a glimpse of hope that the world is returning to normalcy- or at the very least, consumer behavior is. Although The Gap, Inc. (NYSE: GPS) came short on sales estimates, Kohl's Corporation (NYSE: KSS) and Nordstrom Inc (NYSE: JWN) topped estimates, although they have other issues to deal with.

Kohl's posted better-than-expected earnings, but activist investors aren't pleased

Kohl topped Wall Street's estimates and pointed to stronger growth in 2021. Net income amounted to $343 million but sales dropped to $5.88 billion from $6.54 billion a year earlier despite online sales jumping 22% from a year earlier as they accounted for 42% of total sales.

In 2020, the company added more than 2 million new customers in 2020 thanks to its Amazon (NASDAQ: AMZN) returns service, a third of which are millennials. But the group of activists looking to seize control published a letter to shareholders saying the board seems to be content performing just slightly better than the worst companies in retail. Facing pressure from activist investors whose attempt to seize control was rejected at the end of last month, the company will reinstate its dividend and buy back shares.  The retailer has a market cap of $8.99 billion, which is bigger than Nordstrom's and Macy's.

Nordstrom sales drop despite digital surge

Fourth-quarter sales and earnings topped analysts' estimates owed to stronger online demand and growth at its Nordstrom Rack business. The department store chain warned that it is still working through impacts from delayed holiday shipments by selling excess inventories during the first quarter, hoping to be back to normal inventory levels by the second quarter. Its quarterly net revenues of $3.64 billion dropped $893 million from fiscal 2019's quarter, despite digital sales increasing 24% compared to the same period and contributing 54% to total sales. The digital surge wasn't enough to move the needle and net income shrank to $33 million compared to $193 million a year earlier. Although consumer behavior remains uncertain, the retailer is calling for fiscal 2021 sales to grow more than 25%. The retailer has a market cap of $5.93 billion, which is less than Kohl's but greater than Macy's.

Gap misses sales but forecasts return to sales growth in 2021

Ongoing store closures overseas in Europe, parts of Asia and Canada weighed on Gap's fourth-quarter results, with sales coming up short of estimates. The apparel retailer swung to a profit, thanks to its efforts to sell more merchandise at full price and closing underperforming stores.

For the quarter ended January 30th, Gap reported net income of $234 million, or 61 cents per share, compared with a loss of $184 million, or 49 cents per share, a year earlier. Net sales fell about 5% to $4.42 billion from $4.67 billion a year earlier. The company showed continued strength at its Old Navy and Athleta brands which cover basics and workout gear. But its namesake Gap brand and Banana Republic brands saw another quarter of sales declines. Overall online sales were up 49%, representing 46% of net sales during the quarter.

For fiscal 2021, Gap is calling for net sales to be up a mid- to high-teens percentage, as the company is hoping to return to a more normalized, pre-pandemic level of net sales in the second half of the year which depends on customers soon returning to its stores and spending more money on apparel as they resume social activities.

Many retailers are facing shipping headwinds

Backlogged ports in the U.S. and heightened shipping costs continue to hit all kinds of businesses, from those selling apparel and shoes, to appliances and at-home fitness equipment. Moreover, as shoppers do return to stores, the persisting problem could make it even more difficult for retailers to plan their inventories and keep their shelves stocked with goods. COVID-19 will be put to an end by vaccines but the uncertainty that the pandemic created will be more difficult to mend as its long-term impact on consumer behavior is still unknown.

This article is not a press release and is contributed by IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post Retailers Are Hoping for a Better 2021 appeared first on IAM Newswire.

 

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