US retailers plunge as Macy's results worse than expected
US department store operator Macy's reported a much bigger-than-expected drop in quarterly profit and sales, continuing its uphill struggle to attract customers amid a slump in demand for apparel and the shift toward shopping online.
Macy's shares fell as much as 10pc to $26.40 yesterday to levels last seen in 2011, and pulled down shares of rivals across the department store industry.
Sales at Macy's stores which are open at least a year, including sales in departments licensed to third parties, fell 4.6pc in the first quarter.
That was steeper than the 3.5pc drop analysts polled by research firm Consensus Metrix had expected.
Macy's and other department store chains, such as Kohl's and JC Penney, have struggled for years with declining mall traffic and tough online competition, and are trying to cope by cutting costs via store closures, selling or leasing their real estate and keeping inventory levels low.
While such efforts helped Kohl's to some extent in the latest quarter, they are yet to bear fruit at Macy's.
Merchandise inventories at Macy's rose 4.2pc in the quarter, due to a low sell-through. As a result, the company's profit sank 39pc to $71m.
In contrast, inventories fell 2.2pc at Kohl's, helping the retailer post a better-than-expected quarterly profit, and sending its shares up 3.2pc in early trading.
Kohl's efforts to speed up its supply chain, localise merchandise in stores and use stocks in stores to fulfil online orders helped keep inventories low and boost margins, chief executive Kevin Mansell said on a conference call.
However, same-store sales fell 2.7pc, which was steeper than analysts' 1.1pc estimate. (Reuters)