Same store sales at JC Penney fell more than analysts had expected for the first quarter of the year. As a matter of fact, exiting its appliance and in-store furniture businesses resulted in twice the net losses they had anticipated. This sent shares down 8 percent—to $1.06—in premarket trading, on Tuesday.
Earlier this year, the retailer said it would stop selling major appliances—including refrigerators and washing machines—but that move cut the store’s comparable sales by 20 basis points. Thus, Chief Executive Jill Soltau warned investors, on an earnings conference call, that the company is likely to take another hit if United States President Donald Trump goes through with more tariffs assigned to $300 billion worth of Chinese imports.
Fortunately, Soltau says, President Trump’s 10-month trade war with Beijing had raised levies on $200 billion of Chinese goods but has only had a small impact on their business, so far. She reassures investors that JC Penney has been working very hard for at least the past few years to reduce their reliance on suppliers from China. This has helped stem the damage from the trade war and should help minimize further impact.
JC Penney is not the only retailer getting hit hard by the trade war. Kohl’s for example, also delivered disappointing first-quarter earnings in its report, tumbling their stock 13 percent. The decline fro these two retailers, alone, led the charge that dragged many others down as well. Macy’s was also down—just shy of 3 percent—and Nordstrom’s stock fell 1 percent. Dillard’s also slid about 2 percent.
Obviously, this is all part of a bigger inevitable decline in traditional retail. Department stores in America continue to struggle in the digital era as merchandise remains on store shelves while more and more shoppers head to the internet to have things delivered. Amazon, of course, leads this charge, but consumers are also heading directly to the brands they love and simply ordering from them.
This continues to force retailers like JC Penney and Kohl’s to reexamine and restructure the way they do business. Kohl’s for example has moved towards dedicating more physical store space to athletic apparel to display popular brands like Nike and Under Armour. And, in some cases, Kohl’s is even leasing out next door spaces to new tenants like discount grocery store chains (like Aldi) or, fittingly enough, Planet Fitness.