Macy's sales slide continues as retailer preps new marketing
NEW YORK -- Women's shoes, jewelry and discounted apparel helped ease the pace of Macy's slide during the second quarter, but sales were still down as the company seeks stability amid intense competition.
The iconic retailer — whose struggles have been one of the starkest examples of how traditional stores are teetering as consumers shop online — said Thursday it hopes that a renewed marketing strategy that fully launches in September will help it thrive during back-to-school shopping and the crucial holiday shopping season.
Net income rose sharply from $11 million, or 3 cents in diluted earnings per share a year ago, to $116 million, or 38 cents in per share in the second quarter. But that fell short of a projected $156 million from analysts. Macy's sales outpaced analyst expectations, providing some encouragement for harried investors, but profit fell short of projections.
Investors were dismayed. Macy's shares fell 10.25% Thursday to close at $20.67, down $2.36.
Some of the chain's recent initiatives are showing promise. A focus on shoes, furniture, and fine jewelry, the funneling of traffic to stores that remain open in the wake of the closure of dozens of locations, and the incorporation off the off-price "Back Stage'' shops inside 37 Macy's stores, led to a roughly $60 million boost in sales, Macy's said.
The retailer is also continuing to blend its in-store and mobile experience. For instance, a shopper browsing at an actual location will be able to scan a piece of clothing or appliance with the store's mobile app, find out the price and availability, and then make the purchase through the app and have the item delivered to their homes.
Macy's CEO Jeff Gennette said the company's plan to launch a new loyalty program before the holiday season could also help.
“We are working with a mindset of continuous improvement and will adapt our business in order to reach our goal of stabilizing the brick-and-mortar business while investing for accelerated growth in digital and mobile," he said in a statement.
Gennette said Macy's hope to delight customers by offering more high-profile or exclusive merchandise assortments, better integration of technology both online and in the store and "additional enhancements."
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Macy's said Thursday that its sales in the quarter that ended July 29 fell 5.4% to $5.55 billion, beating S&P Global Market Intelligence expectations of $5.52 billion. The retailer's 48 cents in earnings per share, when not counting certain items, also beat the 47 cent estimate from S&P.
Sales at company-owned and licensed stores open at least a year — a figure used to track the health of the retail sector — declined 2.5%.
Macy's was once a shining example of what a department store was supposed to be, celebrated in black-and-white film classics like Miracle on 34th Street, and known around the world for its namesake Thanksgiving Day parade,
But with mall traffic dwindling, and a growing number of consumers preferring to shop with taps of their fingers, the iconic retailer has been struggling to regain its footing. The retailer previously said that it would close 100 stores to increase cash flow and streamline its operations.
Gennette acknowledged in a call with investors on Thursday that the disrupted retail landscape creates "a great sense of urgency’’ for the retailer to innovate quickly.
Still, the retailer forecasts total sales for the full year to be 3.2% to 4.3% lower than in 2016.