Macy’s cut its profit and sales expectations for the year after posting its first comparable store sales decline in almost two years.
The company is citing the late arrival of colder weather, meager tourist business, weak traffic at some malls and problems on its website.
Shares of Macy’s Inc. tumbled 4 percent before the opening bell Thursday.
The Cincinnati retailer posted earnings of $2 million, or a penny per share. Removing one-time charges, per share earns were 7 cents, better than the penny Wall Street expected, according to a survey by Zacks Investment Research.
Revenue declined to $5.17 billion from $5.4 billion, which is short of expectations.
Sales at stores open at least a year, a key gauge of a retailer’s health, fell 3.9 percent. That compares with a 3.1 percent gain in a year earlier.
The same-store sales decline is Macy’s first after seven straight quarters of growth.
Chairman and CEO Jeff Gennette said in a prepared statement that while the company faced a tough year-ago comparison, the same-store sales drop was steeper than expected.
For the year, Macy’s now foresees adjusted earnings between $2.57 and $2.77 per share. Its previous outlook was for $2.85 to $3.05 per share. For sales, the chain now anticipates a decline of 2 percent to 2.5 percent. It previously forecast sales would be about flat.
Analysts polled by FactSet predict full-year earnings of $2.78 per share.
Like many other stores, Macy’s is under pressure to reinvent itself as shoppers increasingly buy online. Department stores in particular face challenges as shoppers are gravitating more toward experiences and away from clothing. And shoppers that are buying clothes are heading to places like T.J. Maxx and other off-price chains for deeper discounted items.
Macy’s, like other classic department stores, has struggled to boost traffic and create a buzz in its aisles as customers go online rather than stand in the checkout line.
It’s pursued a number of strategies, including the addition of rental or secondhand clothes, by recently teaming up with resale site ThredUp.
Becoming leaner is another part of the process. Macy’s has been closing stores and cutting management as part of a restructuring announced in February.