Coronavirus Widens Retail Divide, Leaving Macy's and Victoria's Secret Behind

Envoyer par e-mail
05/21/2020 | 05:09 am
Michelle Gass

By Suzanne Kapner

The coronavirus pandemic is widening the divide between retailers that are drawing shoppers and those that are losing business, accelerating a split that had been playing out before the health crisis forced some chains to temporarily close stores.

Department stores and apparel retailers are feeling the most pain. Their stores were closed from mid-March through April, and while some buying shifted online, it wasn't enough to offset the lost sales in physical locations.

On Thursday, Macy's Inc. offered a glimpse of the damage wrought by the virus, saying that first-quarter sales fell by as much as 45% and that it expects to record a roughly $1 billion operating loss when it reports financial results on July 1.

Victoria's Secret parent L Brands Inc. said quarterly sales fell 37% and that it would close about a quarter of the lingerie brand's stores in North America. And Kohl's Corp. reported a 41% drop in sales for the spring quarter, even as digital sales increased 24%.

Macy's closed all of its roughly 775 stores on March 18. It began reopening locations on May 4, and Chief Executive Jeff Gennette said early results are encouraging. "Demand is moderately higher than we anticipated," he said. "We expect business to recover gradually."

Retail executives and analysts said the fallout from the pandemic is likely to be felt even as life starts to return to normal, with more states loosening restrictions and allowing businesses to reopen.

"We will be in a fairly unprecedented period of change for some time," Kohl's CEO Michelle Gass said. The retailer has reopened about half of its more than 1,100 stores, but shoppers are coming back slowly. Ms. Gass said sales at the reopened stores are about half to two-thirds of normal.

"As it relates to the balance of the year, we are planning the business very conservatively," Ms. Gass said.

For the spring quarter, Macy's expects to swing to an operating loss between $905 million and $1.1 billion, compared with a profit of $203 million a year ago. Kohl's swung to a $541 million net loss in the first quarter, while L Brands booked a nearly $300 million net loss.

By contrast, big-box chains such as Walmart Inc., Target Corp., Home Depot Inc. and Lowe's Cos., whose stores remained opened, experienced a sales surge, as shoppers flocked to them for food, items for the home and other essentials.

"The big-box chains are winning new customers that will stick around after the pandemic," Citi analyst Paul Lejuez said.

Mr. Lejuez recently surveyed 1,000 J.C. Penney Co. customers and asked where they would shop if their local Penney closed. Roughly a third of respondents said they would shop at Target and another third said they would visit Walmart.

Penney filed for bankruptcy protection this month and plans to close about 240 stores, or nearly 30% of its locations. Neiman Marcus Group and J.Crew Group Inc. also filed for bankruptcy this month, along with department-store chain Stage Stores Inc., as the pandemic tipped retailers already in a weakened financial state over the edge.

Other chains are expected to close tens of thousands of stores in coming years as more sales shift online. Just this week, Pier 1 Imports Inc. said it would wind down its operations and permanently close its 540 remaining stores after it can liquidate the inventory. The furniture and housewares seller filed for bankruptcy in February.

L Brands said Wednesday that it would close about 250 Victoria's Secret and Pink stores in North America this year, or a quarter of the lingerie seller's locations in the region. The company is reeling after plans to sell a controlling stake in Victoria's Secret to a private-equity firm were scuttled by the pandemic.

Neil Saunders, managing director of research firm GlobalData Retail, said it isn't just health concerns that will dissuade shoppers from rushing back to stores for nonessential purchases, but also their pocketbooks at a time of record unemployment. More than 36 million workers, or roughly a fifth of the U.S. workforce, have filed for unemployment insurance since March 14.

"Even among those who are going out to shop, there has been financial distress," Mr. Saunders said. "People don't feel comfortable spending freely."

Given that a lot of apparel purchases are tied to occasions--whether social events or work--and those occasions aren't happening, there are even fewer reasons for shoppers to visit the mall, Mr. Saunders said.

Write to Suzanne Kapner at


Corrections and Amplifications

This article was corrected on May 22, 2020 because it incorrectly quoted Kohl's Corp. CEO Michelle Gass as saying sales at reopened stores are about half to a third of normal. Sales at reopened stores are about half to two-thirds of normal.

Envoyer par e-mail