Macy’s said Wednesday that first-quarter sales totaled $5.77 billion, a decrease of 7.4% compared with sales of $6.23 billion in the year-ago quarter, due mostly to its 41 store closures last year. Same-store sales on an owned plus licensed basis fell 5.6% and on an owned basis dropped 6.1%, the fifth straight quarterly decline.
Macy's Q1 adjusted earnings per share was 40 cents on revenue of $5.77 billion, compared to 56 cents per share a year ago on revenue of $6.23 billion. That beat analyst expectations for 36 cents per share on revenue of $5.93 billion, according to a Thomson Reuters consensus estimate.
Despite the beat, Macy's lowered its full fiscal year guidance from $3.80 to $3.90 per share to between $3.15 and $3.40 per share. Shares fell 8.4% in early trading on that news, after rising this year by 5.7%.
"We are seeing continued weakness in consumer spending levels for apparel and related categories," Macy’s CEO Terry J. Lundgren said in a statement. "In particular, our sales trend relative to expectations meaningfully slowed beginning in mid-March, and first quarter results are below our original outlook. Headwinds also are coming from a second consecutive year of double-digit spending reductions by international visitors in major tourist markets where Macy’s and Bloomingdale’s are key destinations, as well as a slowdown in some center core categories—further intensifying the challenges associated with growing topline sales revenue.”
Lundgren said Macy's still sees an opportunity to recover from its Q1 performance, especially in the holiday season, but that it was nevertheless prudent to trim its full-year guidance.
Macy's outlined three areas of focus for the coming months, including doubling down on its off-price Backstage stores, Bluemercury beauty spas and beauty offerings in general, as well as its upscale jewelry offerings and its Last Act flash sales effort.
Macy's also will work on differentiating its merchandise with more exclusive products, including apparel and accessories from Elton John and Lady Gaga, among others. Finally, the retailer said it would work to trim costs while also investing in store associates and technology for better customer service and mobile capabilities.
“As we rebuild our business for a comeback that we expect will begin later this year, we continue to focus on agility and innovation—supporting and testing new ideas and approaches so we can identify the best way to serve evolving customer needs, and moving fast to scale up the most successful pilots on a broader basis to fully capture growth opportunities,” Lundgren said in a statement.
Macy's also said it would continue to find ways to unlock value from its immense real estate holdings, potentially selling some of its properties.
“We are evaluating proposals from potential partners for joint ventures or similar arrangements involving Macy’s flagship locations and the company’s mall-based store portfolio,” according to a company press release. “These complex transactions are being thoroughly explored. Meanwhile, the company will continue its work to monetize unproductive real estate.”