Macy’s had yet another quarter that missed the mark, with Q3 sales falling 6.1% to $5.28 billion. But that isn’t even the biggest disappointment for Macy’s — the retailer saw same-store sales decline for the 12th straight quarter, falling 3.6% compared to an anticipated decline of 2.6%.
The department store can at least hang its hat on its bottom-line results: year-over-year profit more than doubled in Q3, to $36 million from $17 million. Macy’s attributes this income increase to successfully tightening inventory management, preventing more merchandise from being sold on its clearance racks. In fact, despite the sales drop, the profit rate on Macy’s merchandise slightly improved, by one-tenth of a percentage point, to 39.9%.
Online sales aren’t a problem for Macy’s despite its brick-and-mortar struggles. E-Commerce revenue rose at a double-digit pace for the 33rd straight quarter, with the National Retail Federation ranking Macy’s 10th overall in e-Commerce sales.
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In March 2017, then-newly appointed CEO Jeff Gennette outlined a five-pointed “North Star Strategy” designed to reinvigorate the struggling business. The strategy centers on repairing the damage to Macy’s prestige as a special place to shop from years of excessive emphasis on discounting and coupons, as well as significant merchandise overlap with rivals.
Macy’s also has shifted more focus to its Backstage off-price retail division, especially as rival Nordstrom Rack continues to perform well for Nordstrom and off-price mainstays TJX and Ross Stores continue their upward trajectory.
Macy’s reaffirmed its sales and earnings outlook for the full year. Total comparable sales are expected to decline within a range of 2.2% to 3.3% in 2017. Revenue is predicted to fall by 3.2% to 4.3%, while earnings are expected to land at $3.38 to $3.63 per share.
