NEW YORK (CBSMiami/AP) —Macy's profits are down in their first quarter as shoppers continue to opt to buy more online than in stores.
The results fell short of Wall Street expectations as the retail giant reaffirmed that it expects sales to continue falling. Shares fell $3.34, more than 11 percent, to $26 ahead of regular trading.
The Cincinnati-based company's profit fell 39 percent to $71 million, or 23 cents per share. Earnings, adjusted to extinguish debt, were 24 cents per share. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 35 cents per share.
The department store operator's revenue fell 7.5 percent to $5.34 billion, which also missed Street forecasts. Four analysts surveyed by Zacks expected $5.47 billion.
Sales at established stores fell 5.2 percent, the ninth straight period of sales declines for the important metric. Like many department stores, Macy's has faced sluggish sales as customers buy more online and less at the malls where department stores are often an anchor. Macy's has been closing stores as it tries to regroup.
The climate is a big challenge for new CEO Jeff Gennette, who succeeded longtime Chief Executive Terry Lundgren in March.
Macy's had been a stellar performer after the recession, but has seen sales slow as it and other traditional department store chains face competition from online leader Amazon and off-price rivals like TJ Maxx. Under Lundgren, Macy's had been promoting more exclusive merchandise. Macy's also has tested an off-price strategy and new ideas like self-service in some of its shoe departments.
But it hasn't been able to turn around its business. And some services Macy's has tried have flopped. Earlier this month, Macy's and Tailored Brands announced a joint plan to terminate a two-year-old tuxedo rental partnership with Men's Wearhouse.
Gennette said in a statement Thursday that the company would invest to aggressively expand the digital and mobile business and keep working to integrate the online and brick-and-mortar experiences.
The Macy's brand still has around 700 stores, though it has been aggressive about closings. Macy's has also been under pressure from shareholders to get more value out of its real estate holdings, which activist investor Starboard says is worth nearly $21 billion. The department store chain has been looking to make more money from its locations, or sell off key properties.
Macy's expects full-year earnings in the range of $2.90 to $3.15 per share.
Macy's shares have dropped 18 percent since the beginning of the year, while the Standard & Poor's 500 index has increased 7 percent. The stock has fallen 21 percent in the last 12 months.
(© Copyright 2017 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)
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