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The big takeaway from our first batch of department store earnings? Turnarounds take time

Department store chains Kohl's, Macy's and Dillard's reported second-quarter earnings on Thursday, offering a much-needed checkup on retail's health, heading into the busiest shopping periods of the year.

And overall it's a mixed bag of results, with many questions left unanswered.

With talk of a retail apocalypse hitting malls and their anchor boxes hardest, department stores have been trying to inch back to growth, putting in place their own turnaround strategies. But meaningful payoffs take time, Wall Street learned Thursday.

Despite beats from both Kohl's and Macy's on quarterly earnings and sales, the stocks were last falling more than 6 percent and 9 percent, respectively, on the news.

The latest steps of progress for department stores are still just "small drops of success in a vast ocean of challenges," GlobalData Retail Managing Director Neil Saunders said in a note to clients.

Dillard's, which missed Street expectations on both the top and bottom lines, said that significant markdowns led to a disappointing loss during the latest quarter, as the retailer had to deal with excess inventory. Dillard's stock was last falling more than 14 percent.

For Macy's, a recent laggard compared with peers, "the list of things to do is long ... it cannot be delivered overnight," Saunders added. "There is now a real chance of a turnaround, but it has to be actively worked for."

A key metric for retail stocks, same-store sales, was what analysts and investors were watching most closely Thursday morning. And Kohl's, Macy's and Dillard's all posted comparable sales declines.

Nordstrom, another department store set to report earnings after the bell, is the only company that analysts expect this quarter could be able to post positive comps, aided by its off-price division.

As a sign of how much work there is to be done in the department store sector, Nordstrom is also in talks to go private to...


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