How Do These 3 Department Stores Measure Up?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

A number of sources, from Fitch Ratings to UBS, have decided that it's time for investors to get out of department stores. The argument is that customers are trending more toward specialty retailers, and that the benefit well for department store stocks is all but dried up. Other observers aren't sold on the idea, though, and the National Retail Federation ranks among the skeptics. Daniel Butler, a VP of retail operations with the Federation, said that department stores are actually outperforming the retail sector overall.

For investors, it may simply be a matter of being more selective. The range of department stores and performances is broad, so here are three of the bigger players, and how they stack up against one another.

J.C. Penney
At the bottom of the pile is J.C. Penney (NYSE: JCP  ) . I vacillate between thinking that J.C. Penney is about to go out of business and take everyone down with it and thinking that it's about to go out of business but liquidate its real estate to generate some value for investors. Either way, things at the retailer are not working out. Last quarter, both net sales and comparable sales were down more than 16%. The company's loss per share doubled from the quarter last year.

With a new CEO, J.C. Penney is trying to refocus on its core customers and make amends for past grievances. Even with the current work, it seems unlikely that the company is going to hit neutral anytime in the near future. Sales decreases are so deep that management is going to have to continue spending more than it makes just to get people in the doors. Even with the potential upside in real estate, I just can't get behind J.C. Penney

At the higher end of the department store scale, Nordstrom (NYSE: JWN  ) is having a hit-and-miss run. The latest earnings announcement came in under expectations, but the company is still on track to hit its 2013 full-year goals. The company fell short of earnings and comparable sales expectations, but it hasn't lost its focus on customers.

While the focus is still there, I think the slip is indicative of Nordstrom's over-focusing on its Rack brand. The line has sucked up cash, and the push to add new locations may have decreased the focus on sales at Rack. Comparable sales were only up 0.8%, which is not going to sustain the growth that the company needs. I like Nordstrom, but there are still growing pains to overcome.

The middle ground in the department store sector is firmly held by Macy's (NYSE: M  ) . The position gives the company a lot of leeway in its pricing and branding, and that flexibility has given Macy's an upper hand recently. Last quarter, comparable sales were up 3.8% and earnings per share rose 28%. The results were part of an ongoing trend at Macy's, and the company's stock is up 37% over the last 12 months.

If you're looking for the key to success, look no further than the omnichannel plan that Macy's has undertaken. The company is increasing the ways and means that it uses to fulfill customer orders and keep stock on the shelves. Right now, the focus is on shipping items directly from stores to customers and other stores. This has allowed the company to complete more sales, and keep customers interested in the brand. For all these reasons, Macy's is my pick of the litter.

Still interested in Penney's?
J.C. Penney's stock cratered under Ron Johnson's leadership, but could new CEO Mike Ullman present the opportunity investors have been waiting for? If you're wondering whether J.C. Penney is a buy today, you're invited to claim a copy of The Motley Fool's must-read report on the company. Learn everything you need to know about JCP's turnaround -- or lack thereof. Simply click here now for instant access.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2441406, ~/Articles/ArticleHandler.aspx, 9/25/2016 7:09:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
JCP $9.78 Up +0.02 +0.20%
J.C. Penney CAPS Rating: *
JWN $51.57 Up +1.08 +2.14%
Nordstrom CAPS Rating: ****
M $36.62 Up +0.36 +0.99%
Macy's CAPS Rating: **