Macy's, Kohl's close department stores as they struggle to remain relevant

But while Macy’s attempts to address growing challenges, investors’ patience is wearing thin. Shares are down 33% over the past year and currently trade around $13 each, well below the all-cash buyout offer from Arkhouse Management and Brigade Capital Management in December 2023, which valued the company at $24 per share.

Macy’s may have a path forward, GlobalData retail managing director Neil Saunders told Yahoo Finance, “as long as investors can see light at the end of the tunnel.”

Some of its efforts are beginning to bear fruit. The retailer saw a 1.2% same-store sales improvement in the first 50 stores where it invested in more marketing, staff, and assortment.

“Macy’s is in a process of reinvention,” Saunders said. “There are signs that some of the things they’re doing are starting to work.”

For Nordstrom, a turnaround plan will continue in the private markets.

In December, the founding Nordstrom family, which owned a roughly 33% stake in the company, teamed up with retail and real estate operator El Puerto de Liverpool to take the company private. Both will acquire all outstanding shares in an all-cash deal valued at about $6.25 billion.

Going private allows a company to “fix the business for long-term growth,” as it can enact necessary changes without being “under that public scrutiny,” O’Neil told Yahoo Finance.

The soon-to-be privately held Nordstrom outperformed in its fourth quarter results. Nordstrom’s same-store sales jumped 4.7% as sales at the namesake Nordstrom business and off-price Nordstrom Rack business increased 5.3% and 3.5%, respectively.

“Nordstrom has been successful at getting brands that are on trend,” O’Neil said. She noted these brands and lower price points have been resonating with Gen Z.

Nordstrom’s decision to go private could become a playbook of sorts. Swartz noted that publicly traded department stores could be nonexistent in the next five to 10 years. At the same time, he doesn’t think Macy’s or Kohl’s “will be sold anytime soon because the valuations are too low at this point.”

A different story for Kohl’s and JCPenney

Kohl’s is in what Saunders called the “last-chance saloon with investors” after its same-store sales dropped 6.7% in the fourth quarter.

Kohl’s CEO Ashley Buchanan, who joined the company in January, is now the retailer’s third CEO in three years. Buchanan previously led the privately held Michael’s craft store chain and worked at Walmart and Sam’s Club.

He quickly took action with plans to cut roughly 10% of Kohl’s corporate workforce and shutter stores.

Kohl’s has gone through previous reinventions, but “nothing has worked,” Saunders said. With shares down more than 65% in the last year, investors will be eager to see quick results.

Still, “you can’t expect [Buchanan] to work miracles overnight,” Saunders added.

Buchanan will have to reverse many of Kohl’s missteps, like shifting away from private-label brands and toward name brands like Under Armour (UA), which are often excluded in coupon offerings and “took away the opening price point” for core customers, O’Neil said.

Kohl’s now plans to invest in an assortment of categories like fine jewelry, petite apparel, and intimates, Telsey Advisory Group CEO Dana Telsey said. It’s also trying to build “momentum across key growth areas” like its Sephora partnership and home decor.

JCPenney and Arkansas-based department store Dillard’s (DDS) have also been quietly operating.

JCPenney hasn’t reported fourth quarter results yet, but third quarter results were grim, with net sales declining 8% year over year to $1.4 billion.

Given Kohl’s and JCPenney share a similar audience, Swartz said Kohl’s would have benefited had JCPenney gone under five years ago. Still, JCPenney pushes ahead with its $1 billion reinvestment plan announced in 2023.

Meanwhile, Dillard’s has also struggled with the same issues as the others. But that hasn’t been reflected in the share price, which trades at more than $360, nearly 20 times its peers.

While Swartz doesn’t cover the stock, he said it was a company “people had more or less written off as dead,” as the family owns a majority of shares.

As Dillard’s began to improve margins, “investors started jumping into it,” Swartz said.

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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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