NEW YORK, N.Y. – Macy’s raised its sales outlook for the year after it said business improved in the third quarter, and cited stronger clothing sales that spanned the men’s, women’s and children’s sections.
The department store chain also said it struck a deal with a real-estate investor that involves redeveloping some properties. That sent its shares up nearly 7 per cent Thursday. Still, the company’s third-quarter earnings missed Wall Street expectations and a key revenue measure fell for a seventh straight quarter.
Macy’s had been a stellar performer after the recession but has seen sales growth slow in the past year and a half as it and other traditional department store chains face competition from online and off-price rivals. Kohl’s shares also rose Thursday as the company reported better-than-expected profit as it controlled its inventory — but sales fell. J.C. Penney is set to report quarterly results on Friday.
Macy’s CEO Terry Lundgren, who is stepping down early next year, told The Associated Press that business was helped by the chain carrying less inventory but also by new ways to attract shoppers, like areas featuring “smart watches.”
The company launched an Apple shop last month at its flagship New York store in Herald Square, making it the first U.S. department store with a hub devoted to the brand. Beyond the Apple shop, it’s highlighting consumer tech at 180 stores, rolling out a display of smart watches.
Macy’s has also launched its own off-price chain and is testing an artificial intelligence tool that would free up sales assistants to provide higher levels of customer service.
The company now expects that sales at stores open at least a year will be down 2.5 per cent to 3.0 per cent, better than the previous guidance that they’d drop 3 per cent to 4 per cent.
Lundgren said there’s reason to be hopeful after the U.S. presidential election.
“There are a lot of people feeling positive today” about a Donald Trump presidency, he said, citing the victory speech seen as conciliatory.
Lundgren had pulled Donald Trump-branded merchandise including ties from Macy’s in July 2015 after the businessman’s disparaging remarks regarding immigrants from Mexico. And he said it’s too soon to tell whether those who didn’t support Trump will pull back on their spending.
Heading into the holiday season that is critical for retailers, Macy’s is hoping to build momentum by opening an hour earlier on Thanksgiving this year.
Macy’s had said earlier this year it would close 100 stores early next year on top of the 40 it closed this spring. On Thursday, the company said it has given Brookfield Asset Management exclusive rights for up to two years to redevelop 50 of its store properties.
That helped send its shares up $2.54 to $40.92.
For the quarter ended Oct. 29, Macy’s reported earnings of $17 million, or 5 cents per share. That compares with $118 million, or 36 cents per share, a year earlier.
Excluding special charges, the company earned 17 cents, compared with 56 cents last year. Analysts polled by FactSet had expected 41 cents.
Net sales slipped 4.2 per cent to $5.63 billion, about in line with expectations. Revenue at stores opened at least a year fell 3.3 per cent, the seventh consecutive quarterly decline.
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