More people are refreshing their wardrobes at department stores again as they head back into restaurants and offices. That’s great news for stores like Macy’s, Nordstrom and Kohl’s— but the comeback is probably fleeting.
Top department store chains say they are benefiting from built-up demand among consumers after a year in which many shoppers stayed away from stores and limited their clothing purchases. Department stores’ recoveries have also been aided by government stimulus payments.
Sales at department stores jumped 202% in April from the same time last year, according to the latest data from Mastercard’s SpendingPulse, which tracks spending through credit card, debit and other payment methods at retailers.
“We’re very excited about what we’re seeing right now with the consumer and what’s going on in the macro environment,” Macy’s () CEO Jeffrey Gennette said at an investor conference last month. “We’re definitely seeing benefits from the stimulus package.”
In a sign of Wall Street’s current enthusiasm for department stores, Macy’s () stock has rallied 53% this year, Kohl’s ( ) has gained 45%, and Nordstrom ( ) has increased 21% this year.
But the bounce back isn’t enough to turn around pre-pandemic trends.
The department store sector has been in decline because of the rise of online shopping and discount clothing chains such as TJMaxx, Ross () and Burlington ( ). Target ( ), Walmart ( ) and Costco( ) also boosted their clothing offerings in recent years and hooked shoppers with a wider array of merchandise, say retail analysts.
Department store sales shrunk from $184 billion in sales in 2010 to $135 billion in 2019, according to Census Bureau data. In 2020, they plunged to $114 billion, according to the Census Bureau.
Nearly 1,000 department stores have closed since 2018, said real estate research firm Green Street. The pandemic was the latest blow. Department stores were deemed non-essential retailers and closed their stores to customers as the economy shut down last spring. Foot traffic, which makes up the bulk of sales, collapsed.