Infographic: Santa Gives Department Store Investors an Early Christmas Gift

If you bought some stock in the nation's department stores ahead of their third-quarter results, then you probably got an early holiday present.

Shares of the mid-tier department store Kohl's (KSS) surged about 20% this week as third-quarter earnings came in at 80 cents a share, handily surpassing analysts' estimates of 70 cents. Sales fell 2.3% from the prior year to $4.3 billion, in line with Wall Street forecasts.

Kohl's quarter was certainly set up to let down investors due in large part to warmer-than-expected weather. "We believe warm weather in September and October dampened demand for fall seasonal items at Kohl's. The company is the most weather sensitive name we cover, since it is a key item business and customers tend to buy closer to need on average," wrote Jefferies analyst Dan Binder ahead of the results.

But Kohl's sales didn't completely miss the mark, with same-store sales falling 1.7% compared to estimates for a 1.4% drop. The result likely spurred hope the Kohl's shopper is in a good mindset -- at least prior to Election Day -- ahead of the holiday shopping season. Meanwhile, Kohl's inventory fell 10.1% from the prior year to $4.7 billion, leaving it in good shape to show consumers its new full-price products during the holiday season.

The company reiterated its full-year earnings outlook of $3.80 to $4 a share.

"No doubt apparel retail has had its challenges of late, however we are encouraged by Kohl's focus on what they can control such as leaner inventories, tighter expenses and getting product to market quicker, while also launching new
relevant brands like Under Armour (UA) ," Piper Jaffray analyst Neely Tamminga told clients in a note after the results. 

Santa stopped at Macy's this week.

Meanwhile, Macy's (M) sales also looked to be moving in the right direction compared to earlier in the year. Coupled with some new deals to sell off prized real estate, Macy's stock tacked on about 8.5% on the week.

Net sales tallied $5.63 billion, down 4.2% from the prior year, and relatively in line with forecasts. Same-store sales fell 2.7%, but were narrower than estimates that called for a 3.4% drop. Macy's said it resumed its stock buyback plan during the third quarter, repurchasing 3 million shares for about $108 million.

The company reiterated its full-year earnings outlook of $3.15 a share to $3.40 a share. It now sees same-store sales for the full year falling as much as 3%. Previously, sales were seen declining up to 4%.

"Our expectation is that business returns to normal now that we are passed the election -- it's too early to tell what the impact of the election will be, it has only been a day and a half," Macy's CEO-Elect Jeff Gennette told TheStreet in an interview when asked about the confidence in still reaching its full-year profit outlook following the end to contentious race for the White House. Gennette added, "We feel very good about pieces of our business that are starting to pick up strength, really led by the apparel zones in men's, women's and kids."

Nordstrom's stock has had one huge week.

Nordstrom (JWN) notched the most impressive week, with its stock zooming 20%. 

Third-quarter earnings came in at 84 cents a share, excluding one-time items, trouncing Wall Street forecasts for 51 cents a share. Nordstrom's bottom line was boosted by efforts to cut costs online and better manage store inventory. Total sales rose 7.2% from the prior year to $3.54 billion. Analysts expected $3.48 billion.

Similar to other mall department stores like Macy's, Nordstrom saw improving demand for apparel despite a warmer-than-expected autumn. Also, it benefited from a calendar shift of its popular Anniversary Sale into the third quarter. Same-store sales increased 2.4%, in line with analyst projections. Off-price Nordstrom Rack notched a 3.9% same-store sales gain, ahead of forecasts for a 1.1% increase.

Nordstrom's sharper focus on the bottom line has some on Wall Street jazzed up. The retailer expects to save about $50 million this year alone in shipping and fulfillment costs due to its re-energized measures to watch every penny.

"Management is executing on inventory management as well as expense discipline across technology, marketing and the supply chain," wrote Deutsche Bank analyst Paul Trussell in a note on Friday. He added, "Profitability is a new mantra for the company."

Trussell's sentiment on Nordstrom was echoed elsewhere.

"We continue to believe Nordstrom is in the early stages of unlocking earnings growth, and are encouraged as despite the consumer environment, we believe Nordstrom can drive double-digit earnings growth in 2017 with solid execution," said Keybanc analyst Ed Yruma in a note.

The company lifted its full-year earnings outlook to $2.84 to $2.94 a share from $2.60 to $2.75 a share previously. Same-store sales are now expected to be relatively unchanged for the year, compared to a previously expected decline of 1% to an increase of 1%.

Fewer people bought apparel at J.C. Penney in the third quarter.

Unfortunately, Santa didn't arrive early to chimneys of J.C. Penney's (JCP) shareholders.

Shares of the mid-tier department store lost about 3.8% on the week as the third-quarter loss per share came in at 21 cents, worse than forecasts for a loss of 20 cents. Net sales tallied $28.6 billion, falling shy of Wall Street estimates for $2.95 billion.

Despite mall rival Macy's showing improved sales trends in apparel during the quarter vs. earlier in the year, J.C. Penney wasn't so lucky. J.C. Penney's third-quarter same-store sales fell 0.8% compared to estimates for a 2.7% increase, in large part due to weakness in apparel.

The company's Chairman and CEO Marvin Ellison told analysts on a conference call that apparel sales were down in women's, men's and kids categories.

"We aren't pleased with the results in apparel," said Ellison, who was quick to highlight the impact of warm fall weather. Sephora cosmetics shops and home goods sold well, said J.C. Penney.

On the positive side, J.C. Penney said its sales trends improved in October, thanks to momentum behind its new appliance business.

But as a result of sluggish sales in the quarter, J.C. Penney took a more cautious stance with its outlook for the remainder of the year. Same-store sales are now expected to rise 1% to 2%, compared to prior projections for a 3% to 4% increase. Gross profit margin is now expected to be unchanged on the year, revised from an estimated improvement of 10 to 30 basis points.

The revised outlook may have some investors worried about how J.C. Penney will perform during the all-important holiday season.

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