Third-quarter results show retail earnings and failures

This year has tested many new and old retailers and sorted those that have managed to thrive from those that have dived for Chapter 11 or liquidation. An indication as to which will survive this year can be gained from the third-quarter earnings reports for large retailers that serve Idaho’s business centers in the Treasure Valley, Magic Valley, Lewis and Clark Valley, Panhandle and the I-15 Corridor.

Target reported Q3 earnings that outstripped financial analysts’ predictions. For the retail winners of 2020, pulling ahead of Wall Street predictions has been a pattern for companies like Target and Albertsons. It raises the question of whether the financial pundits who make these financial forecasts have been a little too pessimistic lately. Boise-based Albertsons is also beat out the forecasts of Wall Street for Q3.

J.C. Penney deserves at least a mention. No one has seen a Q3 statement, especially since the company has sold itself  for a mere $1.75 billion to its largest creditors, the Real Estate Investment Firms of the Simon Property Group and Brookfield Asset Management, the two largest mall operators in the country. To put things in perspective, $1.75 billion would buy half of a Virginia-class fast attack submarine or 14 and a half F-35 fighter jets. It would also fix all of Kootenai County’s road problems.

Simon is mall-heavy and has its own troubles while Brookfield is more diversified in its holdings. Neither firms responded to inquiries from the Idaho Business Review as to whether they would close more Idaho locations, especially because none of the malls in Idaho with J.C. Penney anchors are owned by either firm. All things considered, J.C. Penney is expected to exit Chapter 11 intact and still in business, for now. None of that will bring the Lewiston or Ponderay locations, both of which closed this summer, back to Idaho.

Macy’s continues to struggle. While its Q3 earnings report ironically began with the line: “third quarter results reflect solid performance across all three brands – Macy’s, Bloomingdale’s and Bluemercury,” the company reported a same-store sales decline of more than 20%. The firm’s Q3 net sales fell to $3.99 billion from $5.17 billion for 2019. While digital sales grew 27%, these gains weren’t enough to offset losses at its brick-and-mortar locations.

While department store like Macy’s and J.C. Penney are in retreat, other companies are moving in. Costco has opened two stores in Idaho: one in Idaho Falls this summer and one in Meridian just a few weeks ago.

Brands selling home improvement continued to prosper during Q3. Home Depot reported that its third quarter net sales increased 23.2% year-over-year to $33.5 billion. Lowe’s reported similar performance, as its third quarter net sales rose 28.3% to $22.3 billion.

Sadly, some familiar retail brands continue to fall on hard times. While the company has only one store in Idaho, on Fairview in Boise, Guitar Center filed for Chapter 11 just before Thanksgiving after months of pervasive rumors in Retail Dive, Market Watch and Business Insider. Guitar Center is the largest retailer of musical instruments in the nation. It is famous for its generous buy-back and trade-in policies, gig leave for employees and rental of equipment to bands to hold gigs of any size. It is not yet known if the firm will liquidate or close the Boise store.