Macy's Inc. said revenue fell more than expected in the final quarter of the year as the retailer posted its eighth straight quarterly decline in same-store sales.
Continue Reading Below
During the December quarter, sales at Macy's stores open at least a year fell 2.1%, better than the 2.9% decline in the year-ago fourth quarter and the 2.2% decrease analysts expected. Still, it marked the eighth consecutive quarter same-store sales have fallen.
Earnings, meanwhile, came in better than Wall Street estimates, and Macy's shares rose 3.1% premarket to $33.30. They had fallen 25% in the past three months through Friday's close.
Foot traffic continues to dwindle at brick-and-mortar retailers as shoppers increasingly opt to make purchase online, and consumers are shelling out less for things like clothing and more on experiences.
Last month, Macy's said it would slash more than 10,000 jobs and detailed plans to close dozens of stores after another holiday season of weak sales, providing more evidence that department stores have lost their once-central place in American retailing.
"2016 was not the year we expected," Chief Executive Terry Lundgren said Tuesday. However, he added the department store made significant progress on key initiatives "that are starting to bear fruit," including improved digital platforms, the rollout of a new approach to fine jewelry and women's shoes, an increase in exclusive merchandise and the refinement of the clearance and off-price strategy.
Continue Reading Below
"We also took a big step forward in rightsizing our physical footprint and restructuring our entire organization," said Mr. Lundgren.
During fiscal 2016, the company closed 66 stores. Macy's plans to shutter an additional 34 stores over the next few years for a total of 100 closures.
Macy's expects sales in fiscal 2017 to be down between 3.2% and 4.3%---less severe than the 4.4% decline analysts polled by Thomson Reuters have forecast. Adjusted earnings are expected between $2.90 to $3.15 a share, bracketing the average analyst estimate for $3.05 a share.
Over all for the fourth quarter, Macy's earned $475 million, or $1.54 a share, down from $544 million, or $1.73 a share, a year earlier.
Excluding impairments, store closings, settlement charges and other costs, per-share profit fell to $2.02 from $2.09.
Sales slipped 4% to $8.52. billion.
Analysts, polled by Thomson Reuters, predicted $1.96 in earnings per share and $8.62 billion in revenue.
Gross margin expanded to 38.3% from 37.4%.
Earlier this month, The Wall Street Journal reported Canada's Hudson's Bay Co. has approached Macy's about a takeover, as the biggest U.S. department-store chain grapples with disappointing results and restive shareholders.
Hudson's Bay is an acquisition-hungry owner of marquee names in retail including Lord & Taylor department stores and Saks Fifth Avenue. While its market value is dwarfed by that of Macy's, Hudson's Bay could raise equity and debt against its real estate portfolio, which could be worth $14 billion, according to people familiar with the matter.
There was no mention of any discussions in Tuesday's report.
By Anne Steele