Macy’s stock price fell nearly 14% after the retailer reported same-store sales declined over the holiday period and lowered its earnings guidance for full-year 2016.
Comparable sales fell 2.1% in the months of November and December 2016 combined from a year ago, signalling that Macy’s, like other department store chains, is continuing to struggle with the shift to online shopping.
The company now expects full-year 2016 diluted earnings per share to be in a range of $2.95 to $3.10, compared with previous guidance of $3.15 to $3.40. In trading Thursday, its shares dropped 13.9% to $30.86.
“While our sales trend is consistent with the lower end of our guidance, we had anticipated sales would be stronger,” CEO Terry Lundgren said in a news release. “We believe that our performance during the holiday season reflects the broader challenges facing much of the retail industry.”
He noted that Macy’s digital businesses — macys.com and bloomingdales.com — both posted double-digit sales gains over the holiday period but “store sales continued to be impacted by changing customer behavior.”
As Investor’s Business Daily reports, other brick-and-mortar chains have reported weak holiday traffic as shoppers made purchases at Amazon and other e-commerce sites. Nordstrom said its full-line stores were seeing the worst traffic since 1972.
Kohl’s shares plunged 15% on Thursday after the company said its same-store sales also dropped 2.1% in November and December.
Macy’s has reacted to its sales declines by, among other things, announcing in August that it would close 100 stores. On Thursday, it said 63 of those stores would be closed in early spring 2017, eliminating about 3,900 jobs as the company focuses on digital efforts and other growth areas such as the expansion of its Bluemercury beauty outlets and the Macy’s Backstage off-price concept.
“Revitalizing the business will not be easy,” Neil Saunders, chief executive at retail consultancy Conlumino, told Reuters. “Shopping trends are firmly against Macy’s, and its brand, while not completely diminished, is most certainly tarnished.”