Macy’s Sales Slide, Though Chain Stays Upbeat About Holidays

(Bloomberg)—Macy’s Inc. remains optimistic about the holiday season, even after posting disappointing sales in the latest quarter.

Same-store sales — a key measure — fell more than Wall Street expected in the last three months. Still, the company reaffirmed its full-year guidance, with Chief Executive Officer Jeff Gennette expecting e-commerce and its loyalty program to fuel sales in the crucial year-end season.

“We are excited about our plans for holiday, which is when Macy’s truly shines as a gifting destination,” he said in a statement.

The season marks a crossroads for the largest U.S. department-store chain, which is trying to get back on its feet after three punishing years. The company has been slashing costs, closing stores and reducing inventory — all in a bid to adapt to brick-and-mortar retail’s new realities.

Investors remain skeptical. Macy’s has lost more than half its value this year, and the shares whipsawed after the latest results were released on Thursday. As of 8:33 a.m. in New York, they were up 1.4 percent at $17.82.

On the bright side: Macy’s cost-cutting efforts have been bolstering profit. Excluding some items, earnings amounted to 23 cents a share last quarter. Analysts had projected 16 cents.

But total same-store sales fell 3.6 percent in the third quarter. That was a bigger drop then the 2.5 percent analysts were expecting.

The chain affirmed its forecast this year for a decline of as much as 3.3 percent at stores that it owns. Adjusted earnings will be $2.91 to $3.16 a share.

Macy’s is focused on pricing this year. Competition has forced the chain to rely heavily on discounts to more merchandise. To improve its position, Macy’s is adding exclusive items that customers are — ideally — willing to pay more for.

Macy’s also is contemplating what to do with its sprawling real estate assets. The Cincinnati-based company announced last November that it hired Brookfield Asset Management to find ways to generate money from its holdings.

Brookfield has the exclusive right for two years to create a development plan for about 50 properties. The holdings include stores and land that Macy’s owns or ground-leases — most of which are in shopping centers that aren’t owned by major mall owners.

To contact the reporter on this story: Lindsey Rupp in New York at [email protected] To contact the editor responsible for this story: Nick Turner at [email protected]


© 2017 Bloomberg L.P

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