Macy's, Kohl's Slash 2016 Profit Forecasts Citing Weak End to Year

NEW YORK, United States — US department store operators Macy's Inc and Kohl's Corp both cut their profit forecasts for 2016 on Wednesday, pointing to weak sales in the last months of the year and bringing shares in the entire retail sector down after hours.

Shares of Macy's fell 9 percent to $32.63 in extended trading. Macy's said the shutdown of 68 stores, a part of the 100-store closures the company had announced in August last year, may result in the layoff of about 3,900 associates.

Kohl's Corp shares fell 14.8 percent to $44.22. Other retailers were also down sharply in after-hours trading, with J.C. Penney Co Inc off 4.4 percent and Nordstrom Inc tumbling 6 percent. Kohl's cut its adjusted profit forecast for the fiscal year ending Jan. 30 to $3.60-$3.65 per share from its previous forecast of $3.80-$4.00 per share.

"Sales were volatile throughout the holiday season. Strong sales on Black Friday and during the week before Christmas were offset by softness in early November and December," Kohl's chief executive Kevin Mansell said in a statement.

Department stores have been struggling in the face of competition from online and discount rivals. The months of November and December traditionally have stronger sales because of holiday shopping around Thanksgiving and Christmas.

Macy's cut its adjusted profit forecast for the year ending Jan. 30 to $2.95-$3.10 per share from $3.15-$3.40 per share that it previously expected.

Macy's said comparable sales on an owned plus licensed basis fell 2.1 percent in November and December. On an owned basis, comparable sales fell 2.7 percent during the period.

Kohl's also reflected weak holiday performance as its comparable sales fell 2.1 percent during the November-December period, while its total sales slid 2.7 percent.

By Gayathree Ganesan; editors: Jo Winterbottom and Matthew Lewis.