Department store operator Macy’s reported a 7.4 percent fall in first-quarter sales, the fifth straight quarter of decline, as customers cut back on buying apparel and a strong dollar discourages tourists from spending heavily.
Shares of Macy’s fell nearly 8 percent in premarket trading immediately following the announcement. (Get the latest quote here.)
The retail giant posted first-quarter adjusted earnings per share of 40 cents, compared to 56 cents a share in the year-earlier period.
Revenue for the quarter came in at $5.77 billion, against a comparable year-ago figure of $6.23 billion.
Wall Street expected Macy’s to report earnings per share of 36 cents on revenue of $5.93 billion, according to a Thomson Reuters consensus estimate.
The retailer lowered its fiscal 2016 guidance to a range of $3.15 to $3.40 a share, from $3.80 to $3.90 a share.
“We are seeing continued weakness in consumer spending levels for apparel and related categories. In particular, our sales trend relative to expectations meaningfully slowed beginning in mid-March, and first quarter results are below our original outlook,” Terry J. Lundgren, Macy’s chairman and chief executive officer, said in a statement.
“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.”
Macy’s shares have risen more than 8 percent this year but remain more than 40 percent lower in the past 12 months. The stock is also underperforming against rival retailer J.C. Penney, which has seen its shares rise more than 25 percent in 2016 and are near the flatline over the past year.
Macy’s (blue) vs J.C. Penney (green)
In January, Macy’s announced it was cutting thousands of jobs as part of restructuring to trim costs and reverse what it called “disappointing 2015 sales and earnings.”
With the overhaul, Macy’s expects to reduce expenses by about $400 million annually, starting this year. It will cut about 3,000 associate jobs and more back-office and call center positions, as well as create a “voluntary separation opportunity” for 165 senior executives. Some of those employees will be moved to other jobs.
The company will also take $200 million in charges related to restructuring and store closings in the fourth quarter of 2015. Macy’s cut its fourth-quarter earnings guidance to $2.18 to $2.23 per diluted share, excluding those charges, versus a consensus forecast of $2.53 per share, according to Thomson Reuters.
— CNBC’s Jacob Pramuk and Reuters contributed to this report.