Shares of the department store chain plummeted 11 percent to less than $2.80 per share on the heels of the report, which put comparable sales at a meager 2.1 percent and lowered expected earnings to between 13 cents per share on the high end, and a loss of 7 cents on the low end, again missing analyst forecasts.
Sales, which were expected to fall 2.7 percent to $2.6 billion, in fact dropped 4.3 % to $2.58 billion, compared to $2.7 billion for the first quarter of 2017. The company blamed the hit on the closure of 141 stores in the last half of the year, part of its strategic closure plan to streamline the business.
The news is especially discouraging because this quarter should have been a strong one: consumer spending is at a high and shoppers have extra dollars in their pockets following Trump’s tax cuts. Macy’s, one of the chain’s top competitors, on Wednesday reported strong comparable sales and raised its earnings guidance for the full year. Another rival, Sears, has been closing locations at a rapid clip in order to keep the floundering business afloat, giving up mall marketshare to JCPenney.
Chief executive Marvin R. Ellison blamed the poor sales in part on the cool weather and “very late start to Spring,” a factor that didn’t impact Macy’s bottom line, according to CEO Jeff Gennette (though the retailer doesn’t break out e-commerce sales from its total figures).
While Ellison pointed to improvements in the company’s apparel category, strengths in men’s, jewelry, Sephora, and its salon, and partnerships with brands including Nike, Adidas, and Puma, it’s still saddled with $4.1 billion in long-term debt, and competition from online retailers isn’t likely to abate any time soon.