Department Stores Are Rising From the Dead, Believe It or Not

Last Updated May 18, 2010 6:10 AM EDT

There was a moment in the depths of this recession, around early 2009, when department stores were floundering and it seemed doubtful some chains would survive the downturn. But that moment is over, as department stores come roaring back with stronger sales and even expansion plans. It appears America isn't done yet with its love affair with old-time department-store glamour.

Leading the charge is best-in-class operator Nordstrom (JWN), where profit shot up and sales at stores open more than a year notched a hefty 12 percent gain compared with the first quarter of '09. The new kid on the department-store block, Kohl's (KSS), saw increased profit and same-store sales up more than 7 percent. The increases are impressive considering that overall retail sales had a big month in March, when they rose less than 2 percent.

Macy's (M) returned to black ink in the first quarter and saw comparable store sales rise more than 5 percent. Macy's CEO Terry Lundgren told the company's annual-meeting attendees that a resurgence at more-upscale division Bloomingdale's is a big contributor to the turnaround, along with a companywide focus on presenting customers in different markets with merchandise aimed at their weather and local tastes. (Gee, that's what the regional department-store chains Macy's bought up used to do, before Macy's implemented its bright idea of efficiency through one national buying office...but kudos to the team for realizing they needed to go back to a more regional buying strategy.)

Even J.C. Penney (JCP) -- long considered a fading name in department stores -- is turning it around, with sales rising again and profit that more than doubled in its most recent quarter. For its part, Sears and Kmart parent Sears Holdings Corp. (SHLD) expects a return to positive comparable-store sales figures for the first time in six years when it announces results for its quarter ended May 1. Even longtime also-ran Dillard's (DDS) is seeing sales and profits rise.

Back in the dot-com downturn of '01-'02, I interviewed Macy's Lundgren and asked him about the forecasts of doom for department stores at that time. He replied that he'd been in the department-store business since the mid-1970s, and had been hearing that pronouncement since the day he started work at now-dead West-Coast chain Bullock's. Department store names might come and go, he told me, but department stores weren't going anywhere. Lungren's long-range perspective seems right on now, as what seemed to be a death-knell for the sector shapes up to be more of a recession-era dip.

Photo via Flickr user evblogger

  • Carol Tice

    Carol Tice is a longtime business reporter whose work has appeared in Entrepreneur, The Seattle Times, and Nation's Restaurant News, among others. Online sites she's written for include Allbusiness.com and Yahoo!Hotjobs. She blogs about the business of writing at Make a Living Writing.