Macy's Thursday reported its first sales decline in the same store in two years, blaming warmer weather and weak traffic at some malls.
Due to the poor results, the mall also cut out all year.
Macy's shares were up more than 6% in trading on the premarket after falling more than 10% after the earnings release.
Here is what Macy's reported for its third quarter compared to what analysts expected, based on Refinitive data:
- Earnings per share: 7 cents vs. expected break
- Revenue: $ 5.17 billion versus $ 5.32 billion expected
- Same store sales: down 3.5%, on owned plus licensed basis, against 1
CEO Jeff Gennette said the sales decline during the quarter was "steeper" than the company had expected, in part because of a warmer fall, lower expenses for international tourists and "weaker-than-expected performance in lower-level centers." [1 9659002] He also said the company experienced problems, albeit briefly, on its website during the period, "in preparation for the fourth quarter."
Macy's now wants to be in the entire year for the sale of the same store on an owned plus licensed basis, to be down by 1% to 1.5%. Previously, a flat area was expected at a 1% gain. It said it expects net sales to fall 2.5% to 2%. An earlier view asked for net sales to be roughly flat. Yearly adjusted earnings per share are expected by Macy's to fall within a range of $ 2.57 to $ 2.77, down from a previous range of $ 2.85 to $ 3.05. Analysts had called for $ 2.80.
Net income for the quarter ended November 2, falling to $ 2 million, or one penny, from $ 62 million, or $ 0.20, the year before. Exclusive one-off items earned Macy's 7 cents a share, better than the breakeven consensus in Refinitive's analyst survey.
Net sales fell to $ 5.17 billion from $ 5.40 billion the year before, and expectations were $ 5.32 billion.
online and at Macy's owned and licensed stores that were open for at least 12 months were down 3.5%, worse than the 1% analyst expectation expected. This also follows seven consecutive quarters of sales gains in the same store.
Earlier this week, Kohl delivered gloomy results that led to broader sales through department stores, including Macy's and Nordstrom. The results from retailers Target and Walmart were much brighter.
The group is facing increased pressure as several brands move away from wholesale channels and shopping malls, trying to sell their goods directly to customers.
by Macy's initiatives to keep their business healthy include upgrading the mobile app and layered loyalty program, adding stop-in stores at some Macy locations for popular brands and getting into clothing rental and resale clothing, as younger buyers prefer such like ThredUp, Rent the Runway and Stitch Fix.
Last quarter, but heavy markdowns used by Macy's during the spring season to remove unsold goods weighed terribly on profits. And inventory built up, which Gennette cited as a core "challenge."
During the third quarter, Gennette said Macy's was able to clear out some of its excess inventory, "resulting in significantly improved margin compression versus the first half."
He added that the company has "confidence" in its holiday plans.
Macy's shares, as of the close of the market, were down nearly 50% this year, while S&P Retail ETF (XRT) was up about 6.5%. Macy's has a market size of about $ 4.6 billion.
Read the full press release here.
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