Although Macy’s Inc. beat market watchers’ top- and bottom-line forecasts for the second-quarter and kept its full-year outlook intact, skeptical investors have been selling off the firm’s stock — as well as shares of several of its competitors — in early-morning trading.
As of 10:30 a.m. ET, its shares remained down nearly 8 percent to $21.25. Shares for peers J.C. Penney Co. Inc., Dillard’s and Kohl’s were also in the red.
Macy’s said today that its Q2 net income accelerated more than 100 percent year-over-year to $116 million, or 38 cent per diluted share. On an adjusted basis, diluted earnings per share were 48 cents, besting forecasts pegging diluted EPS at 46 cents for the department store chain.
Revenues, meanwhile, fell 5.4 percent year-over-year to $5.6 million but were better than analysts’ bets for revenues of $5.5 billion.
Pressured by a challenging retail climate as well as company-specific challenges — a lacking in-store experience and assortment shortcomings, among them — Macy’s has closed more than 100 stores, laid off thousands of employees and aggressively shifted its resources toward digital and consumer engagement over the past year.
While management has suggested that aspects of the company’s turnaround strategy will take time to evidence results, investors and stakeholders have been growing weary of D-store challenges in recent months.
Nevertheless, president and CEO Jeff Gennette, who replaced former chief Terry Lundgren this year, said the firm saw “a notable contribution” from its new women’s shoe and jewelry models, as well as its discount shop-in-shop concept, Backstage, during the recent quarter.
“We are excited about plans for fall, including the launch of a new loyalty program and the new marketing strategy, which we anticipate will further improve our sales trend in the back half of the year,” Gennette added. “We are working with a mindset of continuous improvement and will adapt our business in order to reach our goal of stabilizing the brick-and-mortar business while investing for accelerated growth in digital and mobile.”
Gennette said Macy’s engaging customers “with an improved experience that includes more elevated and exclusive assortments, a better integration of technology both online and in the store,” will be key to the firm’s turnaround strategy.
Looking ahead, the company reaffirmed its full-year outlook.
“There is still work ahead of us; however, I’m encouraged by the progress we’re making on overall performance,” Gennette said.