Shares for Macy’s Inc. are in the red in early morning trading — down more than 12.5 percent, to $25.86, as of 10:05 a.m. — after the firm today reported first-quarter sales and profit that were significantly lower than market watchers’ expectations.
The struggling department store chain — which is in the midst of a brick-and-mortar fleet rationalization that includes more than 100 store closures — said its sales declined 7.5 percent in Q1, to $5.3 billion. Analysts, meanwhile, had predicted sales of $5.5 billion. Comparable sales were down 5.2 percent on an owned basis, and down 4.6 percent on an owned-plus-licensed basis. (In September 2015, Macy’s announced plans to close up to 40 stores in 2016. Later, in August 2016, the firm said it would close another 100 doors.)
Net income also took a tumble, falling more than 39 percent year-over-year during the period, to $71 million, or 23 cents per diluted share. Adjusted diluted earnings per share were 24 cents, compared with analysts’ estimates of 34 cents for diluted EPS.
Nevertheless, the firm’s newly minted CEO, Jeff Gennette, said that Macy’s performance was consistent with its expectations and that the company remains on track to meet its 2017 guidance, which it reaffirmed today.
“We are encouraged by the performance of the pilot programs we tested last year in categories like women’s shoes, fine jewelry, and furniture and mattresses,” Gennette said in a statement. “We look forward to expanding these successful initiatives nationally this year, and anticipate they will have a measurable impact on our performance starting in the second quarter, building through the fall. Additionally, our digital platforms showed continued strong growth in the first quarter.”
Macy’s has been one of several department store chains grappling with consumer shifts toward e-commerce and experiential spending in recent months. JCPenney and Sears this year also announced plans to close stores, while Nordstrom said it would lay off up to 400 staffers in order to shift more resources to mobile and digital.
“In 2017, we are focused on taking actions to stabilize our brick-and-mortar business, including the testing and iteration of additional pilot programs, in order to bring them to scale in future years,” Gennette said. “At the same time, we will invest to aggressively grow our digital and mobile business, while continuing the integration of our online and offline experience, to allow our customers to shop the way they live.”