There was no Miracle on 34th Street for Macy’s in its latest earnings report.
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Macy’s, Inc. (M – Analyst Report), one of the leading department store retailers, came out with third-quarter fiscal 2015 results, wherein adjusted earnings of 56 cents per share beat the Zacks Consensus Estimate by a couple of cents but declined 8.2% from 61 cents delivered in the year-ago quarter.
“Heading into the fourth quarter, we are shifting our organization into overdrive to focus on sales-driving activities in the holiday shopping season, when Macy’s and Bloomingdale’s shine as destinations for gift-giving and self-purchase”, Lundgren said in a release.
“We are disappointed that the pace of sales did not improve in the third quarter, as we had expected”, said Macy’s Chairman and CEO Terry Lundgren in a statement. “Simultaneously, the slowdown in buying by worldwide visitors continued to significantly impact Macy’s and Bloomingdale’s stores in tourist centers”.
Same-store sales fell, all right, dropping 3.6% with unsold good piling up on store shelves. Year-to-Date the stock performance stands at -27.31%.
The department store operator also said it would not pursue formation of a real estate investment trust at this time.
The announcement by Macy’s comes just a day after the McDonald’s Corp announce it would not create a spinoff of its vast real estate holdings in the US, saying it was too risky to its existing business model.
Other properties that it’s considering redeveloping are in Manhattan, Minneapolis and San Francisco.
Stocks traded lower midday Wednesday after rising at the open as investors may be getting used to the idea of an interest rate hike in December.
Such deals would keep Macy’s retail store presence but also bring alternative uses into those buildings. The drop off is not exactly a shock when looking at the retail landscape as a whole, but it does raise a few concerns over whether Macy’s previous omnichannel strategy is actually paying off. OTR Global reiterated a “negative” rating on shares of Macy’s in a research report on Wednesday, November 4th. The Company operates approximately 13 Bloomingdale’s Outlet stores. It recently sold stores in Cupertino, California and Pittsburgh.
Macy’s doesn’t break out its e-commerce or mobile sales, so it’s unclear how material the segments are to the company’s bottom line. They appear to be the latest sign that the US consumer may be shunning traditional retailers in favor of “fast fashion” chains like H&M, Forever 21 and Zara.
The tepid sales results were posted as the company heads toward its key holiday season.
Amazon is also taking a huge bite out of the sales from Macy’s and other big brick-and-mortar retailers.
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Nordstrom, Dillard’s and Kohl’s dropped between 5 and 7 percent.
