Macy’s Stock Drops After It Issues Warnings That Underperforming Stores Would Hurt Results

The Key Take-Aways

• Macy's said its fourth-quarter results would be pulled down by poor performance by some of its stores.
• The largest U.S. retailer warned that sales at comparable stores would remain flat and sales overall would fall below or be the same as its previous guidance.
• Last February, Macy's announced it would be closing 150 locations over three years as it deals with weak sales.

Macy’s’ (M), the U.S.’s largest department store chain, warned that underperforming stores would negatively impact fourth-quarter earnings.

The retailer predicted that Q4’s sales would be between its original estimate of $8.0 to $7.8 Billion or slightly less. The retailer expects its adjusted earnings per share to fall within the previous range of $1.40 – $1.65.

Macy’s will be closing 66 stores in the next three years as it deals with lower sales. It also faces proxy battles from activists investors. Macy’s had announced in February that 150 stores would close over the next three years. Last week, it revealed a list with the first 66 locations to be shut down, which included those located in Philadelphia Center City, Downtown Brooklyn, and other areas.

Macy’s anticipates that comparable store sales will be flat in the first quarter of this year, since its non First 50 stores have been closed. “performing below expectations and generating negative comparable sales.” Macy’s announced that it would close down certain stores due to poor performance.

CEO Says on Track for 'Sequential Comparable Sales Improvement'

Tony Spring, the CEO of Spring Technologies Inc. explained the company’s “Bold New Chapter” strategy is “putting us on track to achieve our second quarter of sequential comparable sales improvement.”

Shares of Macy's are down about 20% over the past year.

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