CINCINNATI - Macy’s Inc. posted its 10th straight quarter of declining sales Thursday, but the results were better than analysts were expecting.
Macy’s reported a $116 million profit on $5.6 billion in revenue for the second quarter, which ended July 29. The sales number was about $40 million better than Wall Street analysts were forecasting. Macy’s earnings per share of 48 cents – excluding extraordinary charges – was 2 cents better than analyst expectations.
Macy’s CEO Jeffrey Gennette said the results were “in line with our expectations.” The company re-affirmed earlier projections that Macy’s will see a full-year revenue dip between 3.2 percent and 4.3 percent.
“We saw a notable contribution from the full execution of our new women’s shoe and jewelry models and the continued successful testing of Backstage in store,” Gennette said. “We are excited about plans for fall, including the launch of a new loyalty program and the new marketing strategy, which we anticipate will further improve our sales trend in the back half of the year.”
Macy’s shares were down 5 percent to $21.85 in early trades Thursday.
“Macy’s sales are trending in the right direction but the company still faces major competitive challenges that are going to make it difficult to completely turn the tide,” said Ken Perkins, president of Retail Metrics Inc. “I think its still too early to say the slump is coming to an end. They are making strides but need to deliver some growth and a strong fourth quarter would go a long way toward moving the needle in that direction.”
Gennette said Macy's is trying to stabilize its retail locations with a combination of exclusive merchandise, improved technology and in-store "enhancements intended to drive traffic and sales." While the company is in the process of closing up to 100 full-line department stores, it opened 16 new specialty stores for the Bluemercury beauty chain it purchased in 2015. And it opened 12 new Backstage discount stores inside Macy's department stores in the second quarter.
Macy's added one location to the list of department-store closures during the quarter. The Magic Valley Mall store in Twin Falls, Idaho is the 69th Macy's store to be identified for closure.
While it hasn't reversed its sales slump, Macy's had a much better quarter than rival Dillards Inc., which surprised analysts with a $17.1 million loss, blaming "significant markdowns" to get rid of excess inventory. Dillard's shares were down nearly 14 percent to $63.35 in early trades Thursday.