by Apparel Resources News-Desk
11-January-2019 | 2 mins read
Stocks of Macy’s dropped down more than 18 percent after the company reported weak holiday sales and cut its 2018 earnings outlook.
“The departmental store chain started strong during Black Friday weekend but did not return to expected patterns until the week of Christmas,” CEO Jeff Gennette said in a statement released before the markets opened. In November and December, sales at stores operating for at least a year — including online sales — climbed 1.1 percent.
The disappointing report set off broader alarms across the retail industry as Target, Kohl’s and L Brands also reported their poor holiday sales. Macy’s stock fell as low as US $ 25.50, down US $ 6.22. It was the biggest loser Thursday on the New York Stock Exchange.
The store chain now expects earnings per share to range between US $ 3.95 to US $ 4.00, down from the previous range of US $ 4.10 to US $ 4.30. It also said its gross profit margin will shrink, rather than grow. Macy’s said that it expects no growth in net sales instead of its previous projection of an increase of 0.3 to 0.7 percent.
“The weak holiday performance now raises a big question mark over Macy’s recovery strategy. This had been gaining traction, but it has been let down by Macy’s inability to get the basics of retail right across all parts of its business. These numbers underline the fact that it needs to work harder at creating a much more compelling and engaging retail experience in 2019 and beyond.” – Neil Saunders, Managing Director, GlobalData Retail
The recent drop in profits also led to Bank of America downgrading Macy’s stock, predicting that the company will continue to see profits drop unless its dramatically boosts sales. The bank changed its rating for the stock from “neutral” to “underperform,” it said in a report. T
Meanwhile, Macy’s is closing eight stores in early 2019 as part of planned closures that were announced over two years ago.