By Uday Sampath Kumar
(Reuters) -U.S. department store chains Macy’s Inc and Kohl’s Corp are leaning on a strong back-to-school season to sustain a sales recovery fueled by shoppers splurging on perfumes, shoes and dresses.
Shares of the companies rose on Thursday following the increased annual sales forecasts, with Macy’s up 17% on its decision to restart paying dividends paused last year due to the uncertainty caused by the pandemic. Kohl’s stock rose 8%.
The back-to-school shopping season, which runs from mid-July through early-September and is the second most important time of the year for department stores, is expected to be a big boost to Macy’s following a year when students were more mostly confined to home computer screens.
“As kids go back to school, we’re getting people shopping for categories that weren’t strong last year – apparel, footwear, backpacks. That is incredibly important for department stores that were hit last year,” said Jessica Ramirez, retail analyst at Jane Hali & Associates.
Industry estimates expect total back-to-school spending on items to cross $100 billion this year, with stimulus checks and advance child tax credits expected to buoy sales.
Sales surged 59% at Macy’s and 31.4% at Kohl’s in the second quarter, as social events resumed and offices gradually reopened in the United States following vaccinations.
“We saw continued strength in dressy apparel, fine jewelry and fragrance as our customers prepared for in-person social events and back to school,” Macy’s Chief Executive Officer Jeffrey Gennette said in a post-earnings call.
The company had pulled in nearly 5 million new customers in the second quarter, he added.
Eyeing the shift to retail stores, Macy’s also announced plans to launch Toys “R” Us shop-in-shops in 400 of its outlets from next year.
Both Macy’s and Kohl’s said they were expediting supplies faster than planned, in a nod to concerns among shoppers of sparsely stocked store shelves during this year’s holiday season.
Macy’s said it expects full-year net sales of $23.55 billion to $23.95 billion, compared with its previous forecast of $21.73 billion to $22.23 billion.
Kohl’s expects full-year net sales to increase in a low-twenties percentage, against a previous estimates of mid-to-high teens percentage rise.
(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)