Halfway to the Holiday Season

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With a swoosh and a swash Hurricane Sandy not only wreaked havoc on the East Coast, but also on retail stores. In the midst of the aftermath, third quarter sales reports are being released and the holiday season is right around the corner. Retailers have a loaded plate of making sure investors are well-informed, keeping sales afloat after this natural disaster, and ensuring that they are prepared for the holidays.

In Prelude to a Holiday Season, five retailers were featured. Among those retailers, J. C. Penney’s (NYSE: JCP) had the weakest third quarter. They released their third quarter report, and according to Jennifer Booton of FOX Business, J. C. Penney’s revenue fell 26.6% from a year ago. Internet sales for the company were also down 37.3%.

To further complicate matters, J. C. Penney’s eliminated their coupons and sales events, only to just bring them back. The customer’s confusion with the store is reflected in J.C. Penneys' sales. CEO Ron Johnson remains confident that his plan will work. He is on a mission to transform J.C. Penney’s from just a regular department store into one that carries 100 smaller shops. In true revolutionary fashion, Johnson is keeping his eye on the final prize; however, he must not neglect his customers in the process. They drive the success and failure of a company. Johnson must do a better job at clarifying his plan or his customers will continue to slip away.

Target (NYSE: TGT), a middle of the road company featured in Prelude to a Holiday Season, had a solid third quarter, reporting a 3.4% rise in sales. Share prices should increase due to consumers needing household items on the road to recovery from Hurricane Sandy. Additionally, Target has announced new Holiday gift cards. Unlike conventional gift cards, these gift cards will include technological features, digital options, and new “multicultural and Hanukkah” designs (dailyfinance.com). This is a clever marketing tool that should help Target sail smoothly this holiday season.

The final three companies featured--Gap (NYSE: GPS), Macy’s (NYSE: M), and Nordstrom’s (NYSE: JWN)--are strong heading into this holiday season. During the third quarter Gap saw a 7% increase in sales. Banana Republic’s Anna Karenina inspired collection has been released and should boost sales for Gap. Moreover, Gap will have stores opened on Thanksgiving Day for customers, and has released the deals those stores will be offering.

In it's third quarter Macy’s saw a 4.3% increase in its revenue, which is great for the retailer. However, in a conference call on Nov. 7, Macy’s Chief Financial Officer (CFO) Karen Hogurt, stated that Hurricane Sandy would affect November sales. Hogurt is right, but if Macy’s continues with a slightly modified game plan, they will be able to come out on top.

A strong competitor of Macy’s, Nordstrom’s, had a good third quarter. They had a 15% increase in revenue and a 38% increase in internet sales. Their anniversary sale gave them an extra boost during this quarter. Unlike other retailers' Black Friday plans, Nordstrom’s will not open its stores until Friday, Nov. 23. They are sticking with a game plan that is not much different from their usual routine during the other times of the year. Nordstrom’s is looking to remain a key competitor with new and old customers.

With retailers having such a loaded plate, it will be interesting to see who finishes their meal satisfied and who finishes their meal still hungry. 

Dig Deeper

The story of J.C. Penney is long and full of colorful history. Incorporated in 1913, the company has suffered alongside the nation through many recessions over the last hundred years. Now the company faces unprecedented challenges and struggles to regain profitability. Investors have to wonder if this company's century-long story is about to come to an end. In order to help you answer that question, The Motley Fool has compiled a premium research report with everything you should know about J.C. Penney. Simply click here to get started.


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