Dwindling foot traffic takes a toll; 'Don't count us out,' says
Macy's finance chief
By Suzanne Kapner and Anne Steele
Macy's Inc.'s troubles showed no sign of abating as the
department store reported another quarter of falling sales, ahead
of a flurry of results from other retailers battling similar
problems with store traffic and online competition.
During the April quarter, sales at Macy's stores open at least a
year declined 5.2%, more than the 3% decrease analysts expected,
according to Consensus Metrix, marking the ninth straight quarter
that same-store sales have fallen.
Shares of the company sank 17% to $24.35 on Thursday as profit
also dropped. The stock has been pummeled this year, already
falling 18% through Wednesday's close.
"Don't count us out, we're not dead," Karen Hoguet, Macy's chief
financial officer, said in an interview. The company is rolling out
several initiatives that it expects to lift sales, including
reconfigured shoe and fine-jewelry departments, she added. "While
we'll be operating fewer stores, we have the opportunity to make
our stores better."
The government is expected on Friday to release its monthly
retail sales data, with economists expecting a 0.5% increase for
April following two months of declines. Ms. Hoguet said that
despite an uptick in sales in March and April from an unusually
weak February, Macy's wasn't banking on a rebound in consumer
spending this year.
Kohl's Corp., Nordstrom Inc. and Hudson's Bay Co., which owns
Saks Fifth Avenue and Lord & Taylor, also reported declines in
same-store sales for the three months ended April 29. Kohl's Chief
Executive Kevin Mansell said sales and traffic improved as the
quarter progressed.
February same-store sales declined around 8%, while same-store
sales in the combined March-April period were down just 1%. Mr.
Mansell said February could have been affected by the
slower-than-usual receipt of tax refunds.
Nordstrom's total sales rose 2.7% to $3.3 billion for the
period. Same-store sales fell 2.8% at its department stores and
Nordstrom.com. But the measure rose 2.3% at Nordstrom Rack, its
off-price chain. Profits increased to $63 million from $46 million
a year ago.
The retail sector is in focus on Wall Street over the next few
days, with J.C. Penney Co. scheduled to report results on Friday
and Home Depot Inc., Target Corp. and Wal-Mart Stores Inc. next
week.
Foot traffic continues to dwindle at brick-and-mortar stores as
shoppers increasingly opt to make purchases online. Retailers have
responded by shutting stores and cutting jobs.
"The past year will be remembered as one of the most challenging
periods for 'brick and mortar' retailers," Sears Holdings Corp.
Chief Executive Edward Lampert wrote in a blog post Thursday,
adding that the Sears and Kmart chains were "fighting like hell" to
transform to meet these challenges.
Macy's early this year said it would eliminate more than 10,000
jobs and detailed plans to close dozens of stores after another
weak holiday season, further signaling that department stores have
lost their once-central place in American retailing.
The 159-year-old retailer has been testing programs to lift
sales, such as weeding out certain shoe styles and buying deeper in
the ones its merchants considered winners. It also added more color
and fashion and armed its sales staff with technology to make it
easier for them to see what was in stock. In certain stores, Macy's
tested an open sales format similar to DSW Inc. The changes, which
will be rolled out to all stores by August, drove a double-digit
increase in shoe sales.
Macy's Chief Executive Jeffrey Gennette, who took the reins from
Terry Lundgren in March, said he expects the expanded programs will
have a measurable impact starting this quarter and building through
the fall. "In 2017, we are focused on taking actions to stabilize
our brick-and-mortar business," Mr. Gennette said.
In all for the first quarter, Macy's posted a profit of $71
million, or 23 cents a share, down from $116 million, or 37 cents a
share, a year earlier. Overall sales fell 7.5% to $5.34 billion,
below expectations of $5.47 billion, in part owing to store
closings.
Still, Macy's backed its 2017 guidance for total sales to be
down between 3.2% and 4.3%.
Kohl's said inventory management helped it improve its bottom
line in the first quarter despite lackluster sales. Gross margin
widened and adjusted earnings per share beat Wall Street estimates
by a dime.
Kohl's has made a big bet on activewear, with its Under Armour
launch and an expanded Nike business, and that helped lift sales in
the quarter, Mr. Mansell said. He added that Kohl's is beginning a
targeted effort to capture sales from competitors who are closing
stores in the hopes of boosting traffic at its own locations.
But the company is also continuing to focus on expense reduction
and plans to outline broader cost-cutting plans when it reports its
next quarterly results in August.
Kohl's stock fell 7.8% to $37.16, while Nordstrom was down 7.6%
to $46.21.
Corrections & Amplifications Nordstrom's total sales rose in
the most recent quarter, while same-store sales fell 2.8% at its
department stores and Nordstrom.com. They rose 2.3% at Nordstrom
Rack. An earlier version of this article incorrectly said total
sales fell, with same-store sales falling 1.7% at its department
stores and rising 8% at Nordstrom Rack. (May 11)
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Anne
Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 12, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Macys (NYSE:M)
Historical Stock Chart
From Aug 2024 to Sep 2024
Macys (NYSE:M)
Historical Stock Chart
From Sep 2023 to Sep 2024