The difference between being deemed “essential” or “non-essential” during the coronavirus crisis had a profound impact on retailers’ bottom line. Businesses that were able to remain open saw sales surge, but not without issues—supply chains have been stretched to meet the demand, and overhead increased with higher labor costs and the money it cost to ensure social distancing and sanitizing stores and distribution centers.

Shuttered stores scrambled to push sales online—the uptick in e-commerce was significant, but not enough to covers losses. The crisis was the final straw for many department stores and malls that had been struggling for various reasons before the crisis. Department stores, like many retailers, are taking the opportunity to reassess their store fleets, and more closures are sure to be in the future.

Physical retail has been struggling, and the pandemic has exacerbated the issues, but stores aren’t going away. There are complex economic forces behind retail closures, as well as the reality that the US simply has too many stores and some private equity–backed retailers have been dumb or greedy.

Recent bankruptcy filings, such as those of JCPenney, Neiman Marcus, and J.Crew, do not herald the end of retail, says Professor Anthony Michael Sabino, Esq. of the Tobin College of Business at St. John’s University.

“Do not write off brick and mortar retail just yet,” says Sabino, who teaches business law at Tobin. “While stores are empty now, and some consumers have detoured to online sellers, it would be a mistake to ignore the pent-up consumer demand that is boiling beneath the surface.”

Essential retailers’ first-quarter earnings as defined by the coronavirus:

Target: “Throughout the first quarter, our team and guests faced unprecedented challenges arising from the spread of COVID-19. In the face of those challenges, our team showed extraordinary resilience as guests relied on Target as a trusted resource for their families. With our stores at the center of our strategy, and a significant investment in the safety of our team and guests, our operations had the agility and flexibility needed to meet the changing needs of our business,” said Brian Cornell, Chairman and Chief Executive Officer of Target Corporation. “With the dedication of our team, the benefit of a sustainable business model and a strong balance sheet, we are confident Target will emerge from this crisis an even stronger retailer, with higher affinity and trust from our guests.”

• 10.8% increase in first-quarter comparable sales. Store comparable sales increased by 0.9%.
• Digital comparable sales jumped 141%.
• Target’s net earnings fell 64% to $284 million, or $0.56 cents per share, compared with $1.53 in the year-ago period.
• Adjusted earnings per share were $0.59, compared with $1.53 in 2019.
• Analysts had expected earnings per share of $0.44.
• Operating income plunged 58.7% to $468 million in the quarter, down from $1.135 billion in 2019.
• Sales rose 11.3% $19.6 billion, beating expectations of $19.02 billion.
• Total comparable sales rose 10.8%%, driven by a 12.5% increase in average basket as shoppers made fewer but bigger shopping trips.
• Target’s digital comp sales accelerated every month in the quarter, rising from 33% in February to 282% in April.
• Nearly 80% of Target’s digital was fulfilled by its stores.
• Same-day services (order pickup, drive-up, and Shipt) grew 278% in the quarter and accounted for about 5% of total comp sales growth.

GlobalData Managing Director Neil Saunders described Target as one of the “beneficiaries of the pandemic” while noting the hit to Target’s bottom line. “This is the reality of retailing during the crisis: those retailers that remained open got a spike in trade, but the cost of servicing that business was punishingly high,”

Walmart: In a call with analysts, CEO Doug McMillon described three distinct parts of the quarter. Initially, he said customers stockpiled groceries and household essentials. Later, he said they bought puzzles, video games, and bicycles to keep them entertained, office and exercise equipment to help them with their new routine at home, and decor to improve their living spaces. At the end of the quarter, the retailer saw a bounce in spending as people got stimulus checks and bought more discretionary items, such as clothing, TVs, and toys.

“Not only have products and categories like hand sanitizer, disinfecting wipes and sprays, toilet paper, beef, and pork been hard to find but items such as laptops, office chairs, and fabric have been cleared out in some of our stores and online,” he said. “We’re working to recover our in-stock position as we begin the second quarter.”

• Walmart posted its biggest increase in quarterly sales (the three months to the end of April) in 15 years with revenues of $134.6 billion, 8.6% more than a year ago; US e-commerce sales rose 74%.
• To accommodate the surge, the retailer hired 235,000 new workers.
• Walmart’s e-commerce sales grew by 74% and its same-store sales jumped by 10% in the first quarter.
• The company’s average ticket increased by 16% and transactions dropped by about 6% during the quarter.
• The retailer withdrew its financial outlook for the year, saying the coronavirus pandemic has created “unprecedented variability.”
• The company hired 200,000 additional employees to clean stores, stock shelves, and fulfill online orders during the pandemic.
• Walmart reported net income rose to $3.99 billion, or $1.40 per share, from $3.84 billion, or $1.33 cents a share, a year earlier. Excluding items, Walmart earned $1.18 per share.
• Analysts were expecting Walmart would earn $1.12 per share, according to Refinitiv.

Amazon: CEO Jeff Bezos said, “If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small. Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe. This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities. There is a lot of uncertainty in the world right now, and the best investment we can make is in the safety and well-being of our hundreds of thousands of employees. I’m confident that our long-term oriented shareowners will understand and embrace our approach, and that in fact they would expect no less.”

• Revenue of $75.5 billion, net income of $2.5 billion, and earnings per share of $5.01 (compared to revenue of $59.7 billion, net income of $3.6 billion, and earnings per share of $7.09 in Q1 2019).
• North American sales were up 29% to $46.1 billion.
• International sales grew 18% to $19.1 billion.
• Subscription services were up 28% to $5.56 billion.
• Amazon’s “other” category, which mostly covers the company’s advertising business, was up 44% to $3.91 billion in revenue.

Non-essential retailers’ first-quarter earnings as defined by the coronavirus:

Kohl’s: “We responded [to store closures] with speed and agility, leaning into our digital business as the only channel to engage with our customers,” Chief Executive Officer Michelle Gass said during an earnings conference call. “While we have a fast-growing digital business, it has only replaced a small portion of the sales loss from our entire store base.”

• Net sales tanked 43.5% during the first quarter, falling to $2.16 billion from $3.82 billion a year ago.
• Net loss of $541 million, or $3.50 per share, compared with a profit of $62 million, or 38 cents per a share, a year prior. Excluding one-time charges, Kohl’s lost $3.20 per share.
• The company did not report its same-store sales results for the quarter due to its shops being forced shut.
• Digital sales were up 24% overall, with growth of more than 60% in April.
• Some of its strongest categories online included home, activewear, toys, and beauty.
• Gross margins during the period fell to 17.3% from 36.8% a year ago, hurt by increased shipping costs and amplified promotions to try to clear inventory.
• As of May 19, about half of its more than 1,160 stores across the US have already been reopened for business.
• In reopened stores, productivity reached 50–60% of pre-coronavirus levels within two weeks of reopening.

Macy’s: “This is a challenging time for the country, for retail and for Macy’s, Inc. COVID-19 has impacted the lives of many of our colleagues and customers, and health and safety remain our top priority. We closed all of our stores – Macy’s, Bloomingdale’s and Bluemercury – on March 18, which had a significant impact on our first quarter results,” said Jeff Gennette, Chairman and Chief Executive Officer. “Looking back, our performance in February was solid and in line with our expectations, but we saw a precipitous decline in sales with the stores closure in March. As a developed omnichannel retailer, we experienced a steady uptick in our digital business in April, which was encouraging, but only partially offset the loss of sales from the stores. The digital performance was driven by strong execution and enhanced fulfillment options, including curbside pickup where allowed.”

• Doesn’t expect to report fiscal first-quarter earnings until July 1 because of disruptions stemming from the pandemic.
• Expects first-quarter sales to fall by as much as 45%, and it could report a loss of more than $1 billion.
• Expects to report an operating loss of $905 million to $1.11 billion, compared with net income of $203 million a year ago.
• It has forecast first-quarter sales to be in the range of $3 billion to $3.03 billion, down from $5.50 billion a year ago.
• As of May 21, 190 Macy’s and Bloomingdale’s stores have fully reopened.
• Another 80 Macy’s stores opened for the Memorial Day holiday.
• Most locations are expected to be open again by late June.
• The company is estimating it will end the first quarter with $1.52 billion in cash on hand, compared with $737 million a year ago.
• It expects the total debt on its balance sheet to be $5.66 billion, compared with $4.72 billion a year ago.

Nordstrom: “We’re entering the second quarter in a position of strength, adding to our confidence that we have sufficient liquidity to successfully execute our strategy in 2020 and over the longer term,” CEO Erik Nordstrom said in prepared remarks.

• Net sales fell 40% during its fiscal first quarter.
• Sales at its full-price department stores were down 36%, and sales at its off-price Nordstrom Rack division were down 45%.
• Total company digital sales were up 5%, reaching $1.1 billion.
• The company had a loss of $521 million, or $3.33 per share, from net income of $37 million, or 23 cents per share, a year ago.
• Revenue fell to $2.12 billion from $3.44 billion a year ago. Excluding its credit card revenue, net sales were $2.02 billion.
• It ended the first quarter with a gross profit, as a percentage of net sales, of 11%, down from 34% a year ago.
• The company said inventories were down 26%, due to “aggressive actions to reduce receipts and clear excess inventory through increased marketing and promotional activities.”
• The retailer says roughly 40% of its department stores are now back open for business, after being forced shut due to the coronavirus pandemic.
• Nordstrom ended the first quarter with roughly $1.4 billion in cash on hand, up from $850 million at the start of 2020.
• The company plans to permanently close 16 full-line stores representing about 14% of Nordstrom’s full-line fleet.

Neiman Marcus has reopened 10 of its 42 stores subsequent to its bankruptcy filing on May 7.

JCPenney filed for bankruptcy protection on May 15—the company planned to reopen 153 of its 846 stores this week, but is likely to permanently close as many as 242 stores.

While there are early signs of recovery, retailers will need to assure consumers their stores are safe for shoppers and store associates.