Department stores aren't dead yet: Macy's and Kohl's stocks rebound
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Illustration: Maura Kearns/Axios
Department stores were left for dead, but they might have a future yet.
Why it matters: Once a staple of the American shopping landscape, the retail format has fallen on hard times with the bankruptcies of chains like Sears, Lord & Taylor and Stein Mart.
The big picture: Department store holdouts Macy's and Kohl's have been shrinking in size, but signs suggest their core-store strategy is starting to pay off.
- Macy's has been leaning into luxury while Kohl's is reversing years of coupon exclusions, expanding the brands eligible for discounts to woo frustrated shoppers and drive store traffic.
By the numbers: Macy's stock soared 20% Wednesday after the retailer delivered its strongest comparable-store sales growth in 12 quarters, fueled by its Bloomingdale's and Bluemercury brands and remodeled Macy's stores.
- Kohl's shares are up 39% over the last month after the company delivered a huge earnings beat and improved sales outlook.
Zoom in: After 14 straight quarters of negative comp sales, Kohl's may return to growth as early as next year, according to TD Cowen retail analyst Oliver Chen.
- The retailer is showing "green shoots" with women's apparel returning to positive comp sales in July, 12% growth in jewelry sales in the second quarter and "momentum in back-to-school," Chen added.
- The company also announced plans in January to close 27 locations by April.
State of play: At Macy's, the company's strategy of closing unprofitable stores and focusing on its best performers is starting to pay off.
- After shuttering 64 namesake stores this year, the department-store chain is showing traction in its "A Bold New Chapter" turnaround plan, despite pressure from tariffs.
- The company's Bloomingdale's division is also performing well, posting its fourth straight quarter of comp sales growth. And its beauty retail brand Bluemercury delivered its 18th straight quarter of comp sales gains.
- "Macy's has risen to the occasion and produced a set of results that have some sparkle," GlobalData retail analyst Neil Saunders wrote Wednesday, noting his firm has collected data showing "improved satisfaction and customer ratings" that are boosting foot traffic to Macy's stores.
Yes, but: Department stores are still grappling with the fundamental problem that consumers have ample alternatives for the wide variety of goods they typically sell.
- Plus, U.S. consumers plan to spend 5% less this holiday season compared to last year — the first pullback since 2020 — as rising costs and tariff worries weigh on wallets, according to PwC's 2025 Holiday Outlook out Wednesday.
- And some of the stock boost for Kohl's, in particular, may stem from meme-stock fever.
The bottom line: Department stores aren't going down without a fight.
