Macy's Inc. reported a worse-than-expected slide in revenue for the first quarter and stretched its swoon in same-store sales to more than two years as the retailer contends with broad weakness at brick-and-mortar stores.
Shares of the company dropped 13% to $25.61 as profit also declined and came in sharply below market expectations. The stock has been pummeled this year, already falling 18% through Wednesday's close.
During the April quarter, sales at Macy's stores open at least a year declined 5.2%, worse than the 3% decrease analysts expected, according to Consensus Metrix, and marking the ninth straight quarter that same-store sales have fallen.
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.
Macy's is among a parade of retailers shutting stores and cutting jobs. Early this year it said it would slash more than 10,000 jobs and detailed plans to close dozens of stores after another holiday season of weak sales, further signaling that department stores have lost their once-central place in American retailing.
The retailer has been testing programs to lift 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," said Chief Executive Jeffrey Gennette, who took the reins at the 159-year-old retailer from Terry Lundgren in March.
He said Macy's will expand those programs nationally this year and anticipates they 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.
Excluding some costs, Macy's adjusted per-share profit fell to 24 cents from 40 cents, below analysts' expectations for 35 cents. Overall sales fell 7.5% to $5.34 billion, below expectations of $5.47 billion, in part owing to store closings.
Gross margin narrowed to 38.1% from 39.1%.
Still, Macy's backed its 2017 guidance for total sales to be down between 3.2% and 4.3% and adjusted earnings of $2.90 to $3.15 a share.
Meanwhile, Kohl's Corp. Thursday said inventory management helped the retailer improve its bottom line in the first quarter despite lackluster sales. Same-store and overall sales fell more than expected, but gross margin widened and adjusted earnings beat Wall Street estimates by a dime.
"We are encouraged by the significant improvement in sales and traffic for the March and April period, after a weak February start to the first quarter," Kohl's CEO Kevin Mansell said.
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.
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.
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, he said.
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 was down 4.6% in Thursday trading to $38.47.
Suzanne Kapner contributed to this article.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 11, 2017 10:44 ET (14:44 GMT)