Macy’s shares plunged after the struggling retailer reported a larger-than-expected decline in same-store sales as well as a 39% drop in quarterly profit.
Macy’s said Thursday that overall revenue fell 7.5% to $5.34 billion in the first quarter, in part due to store closings, while sales at stores open at least a year declined 5.2%. Analysts had expected revenue of $5.47 billion and a decline in same-store sales of 3.0%.
It was the ninth straight quarter that Macy’s comparable sales have fallen. Adjusted profit of 24 cents a share missed analysts’ estimates of 35 cents.
CEO Jeff Gennette said the results “were consistent with our expectations, and we remain on track to meet our 2017 guidance.” But Macy’s shares fell 17% to $24.35 on news of the earnings, the stock’s lowest price in more than 5-½ years.
The earnings report added “to the sense that Macy’s is on a slippery slope,” Neil Saunders, managing director of GlobalData Retail, told CNBC in an email.
Like other retailers facing declining traffic in malls as shoppers shift to e-commerce, Macy’s has been closing shutting stores and cutting jobs. It has also been testing programs to boost sales in certain stores.
“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, who succeeded Terry Lundgren as CEO last month, said. “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.”
He also said Macy’s is seeking to “stabilize” its brick-and-mortar business and “will invest to aggressively grow our digital and mobile business.”
But Saunders believes the latest results show the challenges Gennette faces. “Turning around Macy’s is not a venture for the faint of heart,” he said.
For 2017, Macy’s is still expecting total sales to be down between 3.2% and 4.3% and adjusted earnings of $2.90 to $3.15 a share.