Retailer Macy’s saw its stock fall by 10 percent on Thursday after the department store operator reported another batch of dismal results that suggested it is not succeeding in keeping current customers.
Phil Wahba of Fortune had the news:
The company reported a 5.2% drop in comparable sales for the first quarter, the 8th such period of decline in a row, and a bigger drop than in recent quarters. While Macy’s had told analysts in February to expect sales to drop in 2017, the decline was deeper than the 3.1% decline Wall Street was expecting, according to Consensus Metrix. And the retailer’s profit plunged 39%.
Its shares were down 10% in premarket trading.
Macy’s has been struggling with intense competition from the likes of Amazon.com, TJX Cos’ T.J. Maxx chain and Ulta Beauty, as well as its exposure to hundreds of weaker malls that are failing to bring in shoppers. The chain is in the process of closing dozens of stores and working with partners to find ways to extract money from its real estate.
But what it is failing to do is to re-invigorate its main retail business. A case in point: It recently abandoned a partnership with Tailored Brands’ Mens Wearhouse to offer tuxedo rentals. Still, Macy’s is expanding its chain of T.J. Maxx-like discount stores called Backstage and also testing out self service in some shoe areas.
Hayley Peterson of Business Insider reported the company may close more locations:
But it needs to close even more locations to revive business, according to analysts and industry experts.
The market “probably wants to see another 100 Macy’s stores close,” Jan Kniffen, CEO of consulting frim Worldwide Enterprises, told CNBC Thursday.
Cowen & Co. analyst Oliver Chen echoed that statement in a research note Thursday.
“We fear that Macy’s may need to close more stores than previously announced, and share losses vs. both off-price (TJ Maxx and Ross Stores) and Amazon will continue in the foreseeable future,” Chen wrote.
In a call with analysts on Thursday, Macy’s CEO Jeff Gennette acknowledged that Macy’s might not be done closing stores in the near term.
“I’m not going to say we’re not going to close more stores,” Gennette said. “We do have to stabilize our brick-and-mortar business… That’s where a majority of our business is still done.”
Ally Marotti of the Chicago Tribune reported that the retailer is experimenting with a new way of selling shoes:
Despite a drop in first-quarter sales that dragged down profits, Macy’s did see a lift in women’s shoes after running a pilot program in some stores around the country, CEO Jeff Gennette said in an earnings call with analysts. The retailer started implementing the programs after losing market share in the category through 2015 and in 2016.
The pilots focused on product selection, assuring each store had enough sizes and colors of in-demand styles on hand and sorting shoes by style rather than brand, Gennette said. Macy’s also incorporated some self-service, allowing customers to grab their own size of shoe rather than having to wait for a salesperson.
“This was a category that we had to get right,” he said.
Some version of the pilots will be rolled out to Chicago-area stores, including State Street, by the end of June and to the rest of Macy’s stores by August, the company said.
Meanwhile, Macy’s also is looking to boost sales by selling floors of the State Street store, seeing future tenants as potential customers.