The recent trend with retailers is that many of the big boys haven’t increased guidance in a meaningful way. Despite double digit comps at Macy’s (M), Kohl’s (KSS) and Nordstrom (JWS), guidance was hardly raised as the aforementioned players head into Q4 earnings in late February.
We think the lack of earnings power is due in part by promotional activity. Big discounts after the holidays, combined with gift card redemptions are the likely catalyst for companies commenting that the first part of the month was stronger than the second. Still, this is a much better than having bloated inventories heading into the Spring season, where comps will be tough. The chart below illustrates performance by price point. This month is the first time in three years that ‘Good, Better, Best’ has been inverted such that Kohl’s came in on top, then Macy’s, then JWN.