Macy's Sales Disappoint but Chain Remains Optimistic Ahead of Holidays

CINCINNATI, United States — Macy's Inc. remains optimistic about the holiday season, even after posting disappointing sales in the latest quarter.

Same-store sales — a key measure — fell more than Wall Street expected in the last three months. Still, the company reaffirmed its full-year guidance, with Chief Executive Officer Jeff Gennette expecting e-commerce and its loyalty program to fuel sales in the crucial year-end season.

“We are excited about our plans for holiday, which is when Macy’s truly shines as a gifting destination,” he said in a statement.

The season marks a crossroads for the largest U.S. department-store chain, which is trying to get back on its feet after three punishing years. The company has been slashing costs, closing stores and reducing inventory — all in a bid to adapt to brick-and-mortar retail’s new realities.

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Investors remain skeptical. Macy’s has lost more than half its value this year, and the shares whipsawed after the latest results were released on Thursday. As of 8:33 a.m. in New York, they were up 1.4 percent at $17.82.

On the bright side: Macy’s cost-cutting efforts have been bolstering profit. Excluding some items, earnings amounted to 23 cents a share last quarter. Analysts had projected 16 cents.

But total same-store sales fell 3.6 percent in the third quarter. That was a bigger drop then the 2.5 percent analysts were expecting.

The chain affirmed its forecast this year for a decline of as much as 3.3 percent at stores that it owns. Adjusted earnings will be $2.91 to $3.16 a share.

Macy’s is focused on pricing this year. Competition has forced the chain to rely heavily on discounts to more merchandise. To improve its position, Macy’s is adding exclusive items that customers are — ideally — willing to pay more for.

Macy’s also is contemplating what to do with its sprawling real estate assets. The Cincinnati-based company announced last November that it hired Brookfield Asset Management to find ways to generate money from its holdings.

Brookfield has the exclusive right for two years to create a development plan for about 50 properties. The holdings include stores and land that Macy’s owns or ground-leases — most of which are in shopping centers that aren’t owned by major mall owners.

By Lindsey Rupp; editor: Nick Turner.