Macy’s Inc. (NYSE:M) posted disappointing sales results in the latest quarter. Total same-store sales fell 3.6 percent in the third quarter, more than the 2.5 percent drop analysts were expecting. Revenue dropped 6.1 percent to $5.28 billion, lower than Wall Street’s estimate of $5.31 billion.
The retailer did beat analysts’ earnings expectations. Net income attributable to Macy’s shareholders was $36 million, or 12 cents a share, in the fiscal third quarter, compared to $17 million, or 5 cents a share, one year ago. On an adjusted basis, earnings amounted to 23 cents a share last quarter. Analysts expected adjusted earnings of 16 cents.
The company has reaffirmed its full-year guidance. The chain expects a decline of as much as 3.3 percent in sales at stores that it owns. Revenue is predicted to fall by 3.2 to 4.3 percent. It predicted adjusted earnings of $2.91 to $3.16 a share for the year. The company’s shares rose around 4 percent Thursday morning on the news.
The company remains optimistic about the holiday season. In a statement, Chief Executive Officer Jeff Gennette said, “We are excited about our plans for holiday, which is when Macy’s truly shines as a gifting destination.” The company is expecting e-commerce and its loyalty program to boost sales during the period. The company’s new Star Rewards loyalty program launched in the third quarter.
The U.S. department-store chain is trying for a rebound after three punishing years. To cope, the company has been slashing costs, closing stores, and reducing inventory. The chain has also relied heavily on discounts to move merchandise. The cost-cutting efforts have been boosting the company’s profit. However, Macy’s shares have lost more than half of their value this year.
Gennette said, “We expect continued improvement in our trends in the fourth quarter, including a solid lift from loyalty and digital, and intend to head into 2018 with momentum. Macy’s is also adding exclusive items to its product lineup and contemplating what to do with its sprawling real estate assets. The company announced last November that it hired Brookfield Asset Management to create a development plan for about 50 properties over the next two years. Macy’s off-price nameplate, Macy’s Backstage, is also getting more attention.