Advertise with fastmoving.co.za
 
 

The department store was the second to cut its earnings outlook this week, blaming weak international tourism and sluggish mall traffic.
The department store was the second to cut its earnings outlook this week, blaming weak international tourism and sluggish mall traffic.

Macy's cuts forecast again after gloomy quarter

INTERNATIONAL NEWS

By Uday Sampath - Nov 22nd, 14:04

Macy’s cut its annual profit forecast for the second time in 2019, as the department store operator blamed weak international tourism and sluggish mall traffic for the first drop in same-store sales in two years. 

Shares fell 4% in pre-market trading. The company was the second major department store to cut its earnings outlook this week, after Kohl’s, ahead of the holiday sales season.

Department stores and apparel retailers are grappling with a shift towards more shopping at big-box retailers such as Target and Walmart, as well as at online giant Amazon. Target posted another set of strong sales numbers and raised its full-year forecast, driven by demand for its apparel.

Comparable sales at Macy’s owned and licensed stores fell 3.5% in the third quarter ended November 2, also due to prolonged warm weather that hit demand for winter goods. Analysts had expected a 1% decrease, according to IBES data from Refinitiv.

“The sales deceleration was steeper than we expected,” CEO Jeff Gennette said in a statement.

A drop in international tourists, some of Macy’s biggest spenders, are also pressuring sales. The 161-year-old, Cincinnati-based retailer also experienced some issues with its website “in preparation for the fourth quarter”. Gennette tried to reassure investors of Macy’s preparations for the all-important holiday season, which kicks off next week.

However, analysts remained skeptical.

“We expect a very competitive and difficult holiday quarter for the department store segment,” largely due to steep promotions and discounts to drive traffic into stores and to digital, said research firm Retail Metrics founder Ken Perkins.

Many of the top gift ideas are electronic gadgets, which Macy’s does not sell, Perkins said. “Macy’s needs to differentiate itself in terms of gift selection to drive interest and traffic. It needs to expand items for same-day delivery and execute on this.”

The largest US department store operator, which has closed more than 100 stores since 2015 and cut thousands of jobs as mall traffic plummeted, has completed a revamp of about 150 stores with fresh interiors and better assortment of merchandise, and expanded its off-price “Backstage” departments into more stores, Perkins said.

It has also upgraded its website and worked hard at clearing excess inventory, he said.

Mattresses, fragrances, dresses, and fine jewellery performed well during the reported quarter, the retailer said, while men’s and women’s sportswear, handbags, housewares, and furniture performed poorly.

Macy’s now expects 2019 adjusted profit of between $2.57 and $2.77 per share, compared with its previous forecast of between $2.85 and $3.05. It also projected full-year total comparable sales to fall between 1% and 1.5%, compared to a previous forecast of up to a 1% rise.

Adjusted net income attributable to Macy’s shareholders fell to $21m, or 7c per share, in the quarter, from $83m, or 27c per share, a year earlier. Analysts had expected the company to break-even on a per-share basis.Business Live  

Related News

Checkers brings world-class retail to Constantia with new flagship store
27/11/2019 - 13:01
Checkers has opened the doors to its state-of-the-art 2 330 m² flagship supermarket at the Constantia Emporium as the retailer continues to take innovation to new heights.

Woolworths carves out market share in SA
27/11/2019 - 10:11
In Australia, David Jones's sales declined 2.1%, with the company saying a store refurbishment contributed to the decline.

Push and pull strategies work together to keep consumers coming back for more
26/11/2019 - 10:20
The retail sector is under increasing pressure as consumers have shrinking disposable income in a strained economy. Maintaining share of wallet is critical. Relying solely on a push route to market strategy from manufacturers into retailers is not enough to get consumers buying products. A pull strategy needs to coexist with the push to drive brand consumption. Integrating these strategies requires intelligent and insightful decision-making. This, in turn, requires data generated through smart technology which provides line of sight across the value chain from manufacturer to distribution, retailer to the consumer.

Exclusive leases must fall: Commission cracks whip on Shoprite, Pick n pay, Spar, Woolies
26/11/2019 - 09:57
The Competition Commission Inquiry into Grocery Retail, published on Monday, called for an end to the exclusive leases negotiated by national retail chains in all shopping malls across the country in a bid to open up access to markets for smaller players.

Today’s customers are loyal to speed and convenience, not brands
25/11/2019 - 11:15
Consumer expectations are rapidly shifting as technologies such as mobile, geolocation, social media and increasingly, Internet of Things devices and wearables, connect people to a world of easily accessible information and convenient services. With the ability to browse, compare and order with a few swipes and taps, consumers are becoming trained to value convenience and service above nearly anything else.