Macy's shares dip on feeble earnings

Retailer victimized by online competition

Macy’s Inc. shares sustained their biggest drop since 2008 yesterday, after the nation’s largest department store owner missed Wall Street quarterly earnings forecasts by 10 cents and failed to hit revenue and same-store sales targets.

Macy’s net income dropped 39 percent to $71 million, and sales declined 7.5 percent to $5.34 billion, in part due to store closings announced last year.

Macy’s is working to stabilize its brick-andmortar business and grow digital and mobile sales amid competition from online giant Amazon.com Inc. and off-price rivals including Framingham’s TJX Cos. Inc.

“We don’t have our heads in the sand as to the significant challenges,” CEO Jeff Gennette said. “We need to get bigger meals out of fewer things — make it easier to shop.”

Macy’s shares fell more than 17 percent yesterday to close at $24.35, after hitting a 52-week low of $24.25 in intraday trading. Macy’s and Kohl’s Corp.’s worse- than- expected sales prompted a selloff of department store shares.

Macy’s results represent a significant deterioration over recent quarters, said Neil Saunders, managing director of GlobalData Retail.

“That this worsening comes off the back of feeble prior-year numbers ... only adds to the sense that Macy’s is on a slippery slope,” he said.

And though Macy’s maintained its full-year guidance, Carol Levenson, research director for Gimme Credit, said the company would need quite the turnaround.

“Although the first quarter is a relatively minor one, it would take quite the Christmas miracle and a huge reversal in traffic to see sales growth improve from negative 5.2 percent to negative 2.2 percent (to) 3.3 percent for the year, which remains management’s guidance,” she said.