Macy’s released its first quarter earnings report before opening bell this morning, posting adjusted earnings of 40 cents per share on $5.77 billion in revenue, a 7.4% year over year decline. Analysts had been expecting 36 cents per share in earnings on $5.93 billion in revenue.

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Macy’s earnings plunge

Reported earnings were 37 cents per share, compared to last year’s 56 cents.

Management said consumer spending in apparel and related categories remains weak and sales trends slowed in the middle of March. They also said a second consecutive year of weak international tourism trends weighed on the department store chain’s results. They also noted that they closed 41 stores last year, which also impacted the decline in sales.

Macy’s also said it continues to evaluate proposals from possible joint venture partners for its real estate plans for its flagship stores and mall-based stores. It increased its quarterly dividend to 37.75 cents per share from the previous 36 cents per share. That dividend will be payable on July 1 to shareholders of record on June 15.

Macy’s cuts guidance

Management reduced their guidance for full-year earnings to a range of $3.15 to $3.40 per share, compared to their previous guide of $3.80 to $3.90 per share. The current consensus estimate is $3.80 per share, putting their new outlook significantly behind it. They expect comparable store sales to decline by 4% to 4%, with owned store comparable sales being lower by about 50 basis points. Their previous outlook for comparable store sales was about a 1% decline in the 2016 fiscal years.

This year Macy’s plans to open a new store in Kapolei, Hawaii and 42 Bluemercury stores, including 24 freestanding stores and 18 stores inside Macy’s stores. Also 16 Backstage locations are planned, one of which will be freestanding while the other 15 are inside stores, and a Bloomingdale’s Outlet store in Orange, California.

Shares of the retail chain plunged in premarket trading this morning, falling by as much as 7.68% to $34.10 following this  morning’s earnings report.

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