Image source: Macy’s
(Reuters) – Macy's Inc reported a more than 20% drop in quarterly comparable sales on Thursday and said it expects that loss to continue into the fall, signaling a tough holiday season for the coronavirus-battered department store chain.
The retailer’s shares were down nearly 5% in premarket trading but have recovered some of those losses in regular morning hours. Its stock has lost nearly half its value in a tumultuous year in which it has had to lay off thousands of workers and suffer through plunging sales due to outlet closures.
Macy’s Chief Executive Officer Jeff Gennette said in a statement that the company was keeping an eye on a new wave of COVID-19 cases across the United States and the potential impact on its business.
The country has been regularly recording over 100,000 daily COVID-19 infections over the last two weeks, raising fears that the spiking numbers will keep people away from already sales-battered retail stores heading into the holidays.
Macy’s said it expects comparable sales of owned and licensed stores to fall by a low- to mid-20s percentage in the fall season.
With the closure of malls and stores due to coronavirus-related lockdowns, increased investments in its fulfillment offerings, such as curbside store pickup and same-day delivery, executives said, would help the retailer in the months to come.
“Looking to Holiday 2020, we know this year is different,” CEO Gennette said. “We have the right gifting assortment with newness from value to luxury, and our expanded fulfillment options allow customers to shop safely and conveniently, in store or online.”
The holiday season accounts for a huge chunk of annual sales for retailers. This year, retailers from Macy's to Walmart Inc are rolling out their earliest-ever holiday deals and promotions.
Macy’s, along with its department store rivals, depends heavily on tourists – particularly those traveling from overseas – to drive sales at stores like its flagship Herald Square location in New York City.
Big box retailers like Walmart and Target that didn't have to shut their stores, even temporarily, have seen sales soar during the pandemic, clocking record high online sales as Americans opt to make fewer trips and load up on daily essential items like toilet paper and cleaning wipes.
Macy’s net sales fell in the third quarter ended Oct. 31 to $3.99 billion from $5.17 billion a year earlier but beat analysts’ estimates of $3.86 billion, according to IBES data from Refinitiv.
The company posted an adjusted net loss of $60 million, or 19 cents per share, compared with earnings of $21 million, or 7 cents per share, a year earlier.
Analysts had expected a loss of 79 cents per share.
Reporting by Uday Sampath in Bengaluru and Melissa Fares in New York; Editing by Maju Samuel.