Macy’s Inc. is facing a tough start to the holiday season.
The department store chain today reported its first same-store sales decline in two years during the third quarter and slashed its guidance for the full year.
Adjusted earnings per share of 7 cents topped analysts’ expectations of a break-even point, and adjusted profits for the period ended Nov. 2 fell to $21 million from $83 million the previous year. Revenues were also down 4.3% to $5.17 billion, versus Wall Street’s bets of $5.32 million, while same-store sales dropped 3.5%.
As of 9:00 a.m. ET in Thursday premarket trading, Macy’s stock was down 4.3% to $14.37.
“After seven consecutive quarters of comparable sales growth, we experienced a deceleration in our third quarter sales,” Chairman and CEO Jeff Gennette acknowledged in a statement. “While we anticipated a negative comp [because] we were lapping a very strong third quarter last year, the sales deceleration was steeper than we expected.”
The Cincinnati-based firm blamed the disappointing results on the warmer fall season coupled with slowing foot traffic, amid a broader shift from brick-and-mortar to online retail. In the past few months, Macy’s has been investing more resources in its e-commerce mobile app, which it said is on track to exceed the goal of $1.5 billion in sales, as well as enhancing its website to promote online sales and drive in-store visits.
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“Our third-quarter sales were impacted by the late arrival of cold weather, continued soft international tourism and weaker-than-anticipated performance in lower-tier malls,” Gennette added. “We also experienced a temporary impact on our e-commerce business due in part to work on the site in preparation for the fourth quarter. The team has completed that work, the site is upgraded and our customers can expect an improved experience this holiday season.”
Although Gennette said the retailer has “confidence in our holiday strategies,” Macy’s has lowered its outlook, with adjusted earnings per share in the range of $2.57 to $2.77, below the previous guidance of $2.85 to $3.05. It also expects sales to be down 2.5% to 2.0%, versus the previous reading of approximately flat.
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