Macy’s released mixed earnings results before opening bell this morning, posting adjusted earnings of 56 cents per share and $5.87 billion in revenue, a 5.2% decline from last year. Analysts had wanted to see 54 cents per share in earnings and $6.1 billion in sales. In last year’s third quarter, the department store chain reported revenue of $6.2 billion.
Macy’s earnings plunge
Reported earnings were 36 cents per share, compared to last year’s 61 cents. Comparable store sales for company-owned and licensed locations fell 3.6% during the third quarter. For company-owned stores only, comparable store sales fell 3.9%.
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“We are disappointed that the pace of sales did not improve in the third quarter, as we had expected,” said Macy’s Chairman and CEO Terry Lundgren in a statement. “Spending by domestic customers remained tepid, especially in key apparel and accessory categories. Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s stores in tourist centers, which are some of our company’s largest-volume and most profitable locations.”
Macy’s attempts to spur sales growth
Macy’s management said they have started testing new initiatives to spur sales growth, like the expansion of the Backstage free-standing stores in off-mall locations. Also this morning, the retail chain and Luxottica Group issued a joint press release announcing their agreement to open licensed LensCrafters outlets in up to 500 Macy’s stores.
Also this morning, Macy’s addressed the question of whether they will pursue the formation of a real estate investment trust, which is becoming a trend in the industry. Management has decided not to do this. They will be looking for potential partners in joint ventures to redevelop some of the company’s flagship stores and other ways to monetize some of its assets.
Macy’s cuts outlook
Macy’s management no expects earnings for the full year to be between $4.20 and $4.30 per share, excluding items. This is a decline from the previously provided outlook of $4.70 to $4.80 per share. For the fourth quarter, management expects adjusted earnings of $2.54 to $2.64 per share.
Shares of Macy’s plunged by as much as 8.51% to $43 per share in premarket trading this morning.