Macy's slashes outlook after steeper than expected sales slowdown

Macy's blamed 'the late arrival of cold weather'

Macy’s reported mixed third-quarter results and cut its full-year earnings and sales forecasts, sending shares lower ahead of the opening bell.

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The retailer earned $2 million, or an adjusted 7 cents a share, on revenue of $5.17 billion. Wall Street analysts surveyed by Refinitiv were expecting a breakeven quarter on sales of $5.32 billion. Comparable sales fell 3.9 percent.

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“After seven consecutive quarters of comparable sales growth, we experienced a deceleration in our third-quarter sales,” Macy’s CEO Jeff Gennette said in a statement. The slowdown was steeper than expected, he said, even with a particularly strong quarter a year earlier.

Still, "having cleared the excess inventory we faced earlier in the year, we were able to take a more balanced approach to sales and profit in the quarter," the CEO added, which meant profit margins were under less pressure than earlier in 2019.

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MMACY'S INC.
$15.31
-0.40 (-2.55%)
JWNNORDSTROM
$38.36
-1.33 (-3.35%)

Macy's cited the "late arrival of cold weather, continued soft international tourism and weaker than anticipated performance in lower-tier malls" as reasons for declining sales.

Looking ahead, the retailer expects full-year net sales will drop as much as 2.5 percent, compared with its previous prediction that they would be roughly the same as in 2018. Proft will be $2.57 to $2.77 a share, down from a previous forecast of $2.85 to $3.05.

The department-store operator booked $17 million of pre-tax gains, or $13 million after taxes, related to asset sales. Macy's will sell its landmark building in downtown Seattle and close the store in February 2020.

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The company's shares were down 49.6 percent through Wednesday while the S&P 500 was up 24 percent. Rival Nordstrom is scheduled to report its quarterly earnings after the close of regular trading in New York.