Observations on Sears, Kohl’s,
Macy’s, and J.C.Penney
By Amine Ayad
In total sales, Macy’s & Kohl’s have been winning
$24.9B
$16.4B
$18.5B
$46.0B
$27.7B
$19.3B
$13.0B
$39.9B
11.2%
17.6%
-29....
Kohl's increased stores’ count by 12%
Macy’s is a clear winner in sales growth by store
-13%
-30%
18%
11%
-52%
1%
12%
-1%
...
Macy’s operating income had the best overall trend
Macy’s negative 2008 results were due to $5.4B “Goodwill impairment cha...
Kohl's operating income (11.5%) as a percent of
sales by store is impressive
-2.0%
-7.1%
11.5%
10.7%
-10.0%
-5.0%
0.0%
5.0...
Observations from retailers’ strategies & from
stores’ visits vary greatly
• Strategically, J.C. Penney’s underestimation ...
Leadership and phycology of retail will be vital
to improving trends
• A motivated and engaged retail employee means produ...
Resources
• 2012 Form 10-K (Sears, Kohl’s, Macy’s, &
J.C.Penney)
• Ayad, A. (2008). Optimizing inventory and
store results...
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Observations on Sears, Kohl's, Macy's, and J.C. Penney

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Observations on Sears, Kohl’s, Macy’s, & J.C.Penney: What does the future hold? What should be done to improve the trends?

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Observations on Sears, Kohl's, Macy's, and J.C. Penney

  1. 1. Observations on Sears, Kohl’s, Macy’s, and J.C.Penney By Amine Ayad
  2. 2. In total sales, Macy’s & Kohl’s have been winning $24.9B $16.4B $18.5B $46.0B $27.7B $19.3B $13.0B $39.9B 11.2% 17.6% -29.8% -13.4% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% $.0B $5.0B $10.0B $15.0B $20.0B $25.0B $30.0B $35.0B $40.0B $45.0B $50.0B Macy's Kohl's JCPenney Sears Holdings Changes in Revenue from 2008 to 2012 Y2008 Y2012 Increase / Decrease
  3. 3. Kohl's increased stores’ count by 12% Macy’s is a clear winner in sales growth by store -13% -30% 18% 11% -52% 1% 12% -1% 2,548 1,104 1,146 841 0 500 1,000 1,500 2,000 2,500 3,000 Sears Holdings JCPenney Kohl's Macy's -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Sales Increase / Decrease between Y2008 & Y2012 # of stores Increase / Decrease between Y2008 & Y2012 # of stores Y2012
  4. 4. Macy’s operating income had the best overall trend Macy’s negative 2008 results were due to $5.4B “Goodwill impairment charges / adjustment” $5,000 $4,000 $3,000 $2,000 $1,000 $0 $1,000 $2,000 $3,000 $4,000 Y2008 Y2009 Y2010 Y2011 Y2012 Operating Income in millions Sears JCPenney Kohl's Macy's
  5. 5. Kohl's operating income (11.5%) as a percent of sales by store is impressive -2.0% -7.1% 11.5% 10.7% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Sears Holdings JCPenney Kohl's Macy's -$1.5M -$1.0M -$.5M $.0M $.5M $1.0M $1.5M $2.0M $2.5M $3.0M $3.5M Operating income by store Operating income as a % of sales
  6. 6. Observations from retailers’ strategies & from stores’ visits vary greatly • Strategically, J.C. Penney’s underestimation of the impact of changing business model from “high/low price” to “every day low price (EDLP)” coupled with indecisiveness regarding company’s long-term direction proved very harmful. One must ask: how aligned with “EDLP” strategy was adding high-end brands such as Sephora? • Tactically, after the new strategy, J.C.Penney’s stores appeared more organized but assortment and sizes were clearly lacking. Personally I tried 3 times to buy from J.C. Penney and ended up not buying because I didn’t find my size (shirt 17.5 x 32) and shoes (9 wide). • Macy’s marketing and merchandising (assortment) appear very attractive to shoppers. • Kohl’s seasonal entrance and exit, including black Friday / Christmas, appear successful. • Sears exiting / closing low volume stores doesn’t appear to helping operational income and profitability i.e. need more sales per store. • Sears and J.C.Penney are important retail companies and they can certainly revise the negative trends but time is running out.
  7. 7. Leadership and phycology of retail will be vital to improving trends • A motivated and engaged retail employee means productivity and sales. • Customers vote by their money and customers want variety of merchandise, depth of merchandise, and great prices i.e. efficiency is critical. • Marketing appear to be critical to success in this competitive environment. • Ability of CEO and executives to listen to employees and customers coupled with ability of employees to express their ideas freely will help improve trends. • Success in retail is a function of “inspirational leadership, functional knowledge, and critical thinking” (Ayad, 2008).
  8. 8. Resources • 2012 Form 10-K (Sears, Kohl’s, Macy’s, & J.C.Penney) • Ayad, A. (2008). Optimizing inventory and store results in big box retail environment. International Journal of Retail & Distribution Management, 36 (3), 180-191 Opinions expressed are solely my own, and none of the material in this document are shared, supported, or endorsed in any manner by my employer.

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