A pedestrian carries a Macy’s Inc. shopping bag while walking past a store in New York.
Idris Talib Solomon | Bloomberg | Getty Images
Macy’s on Thursday reported its first same-store sales decline in two years.
Because of the poor results, the department store chain also slashed its full-year outlook.
Its shares dropped more than 10% in premarket trading on the news.
Here’s what Macy’s reported for its fiscal third quarter compared with what analysts were expecting, based on Refinitiv data:
- Earnings per share: 7 cents vs. 0 cents expected
- Revenue: $5.17 billion vs. $5.32 billion expected
- Same-store sales: down 3.5%, on an owned plus licensed basis, vs. a drop of 1% expected
CEO Jeff Gennette said the sales deceleration during the quarter was “steeper” than the company had anticipated, due, in part, to a warmer fall, weaker spending by international tourists and “weaker than anticipated performance in lower tier malls.”
He said the company also experienced issues, albeit briefly, on its website during the period, “in preparation for the fourth quarter.”
Looking to the full year, Macy’s is now calling for same-store sales, on an owned plus licensed basis, to be down 1.5% to down 1%. Previously, it was expecting sales to be flat to up 1%. It says it expects net sales to drop 2.5% to 2%. A prior outlook was calling for net sales to be about flat. Annual adjusted earnings per share are forecast by Macy’s to fall within a range of $2.57 to $2.77, down from a prior range of $2.85 to $3.05.
Net income during the quarter ended Nov. 2 fell to $2 million, or a penney a share, from $62 million, or 20 cents, a year ago. Excluding one-time items, Macy’s earned 7 cents a share, better than the 0 cents analysts were expecting, based on Refinitiv data.
Net sales fell to $5.17 billion from $5.40 billion a year ago, missing expectations for $5.32 billion.
Earlier in the week, Kohl’s delivered dismal results that led to a broader selloff among department store retailers, including Macy’s and Nordstrom. Results from big-box retailers Target and Walmart were much brighter.
The group faces increased pressure, as more brands are moving away from wholesale channels, and shopping malls, and trying to sell their merchandise directly to customers.
Some of Macy’s initiatives to keep its business fresh include upgrading its mobile app and tiered loyalty program, adding stop-in shops to some Macy’s locations for popular brands and getting into the clothing rental and apparel resale businesses, as younger shoppers are favoring the likes of ThredUp, Rent the Runway and Stitch Fix.
Last quarter, however, heavy markdowns used by Macy’s during the spring season to clear unsold merchandise weighed terribly on profits. And inventories built up, which CEO Jeff Gennette cited as a core “challenge.”
Macy’s shares are down nearly 50% this year, while the S&P Retail ETF (XRT) is up about 6.5%. Macy’s has a market cap of roughly $4.6 billion.
This is a developing story. Please check back for updates.
