GAME OF THREADS

Street gores mall anchors, Macy’s vows a fight

The bloody battle at shopping malls has spilled onto Wall Street — again.

Shares of Macy’s and its rival mall anchors got hammered on Thursday despite betterthan-expected sales and earnings, as investors fretted over the chains’ inability to get shoppers back into their stores.

The big problem: Macy’s, Kohl’s and Dillard’s all reported results showing that sales continue to tumble — albeit less steeply than in recent quarters — as they take deep discounts on merchandise, which has sorely squeezed margins.

Macy’s Chief Executive Jeffrey Gennette, who took the reins from longtime CEO Terry Lundgren this spring, tried to sound a positive note about his initial months attempting at turning around the iconic retailer.

Still, Gennette couldn’t help but admit that shopping malls have become engulfed in brutal price wars.

“I’m encouraged by the secondquarter, and we’re ontrack for the year,” Gennette said on a conference call. “But I also knowthat weoperate in an environment of intense and destructive competition, and that our customer has more shopping options than ever.”

Same-store sales — or sales at stores open at least a year, a closely watched metric in the retail industry — fell 2.8 percent at Macy’s, 1 percent at Dillard’s and 0.4 percent at Kohl’s.

Those drops were less than analysts had forecast, but they failed to inspire confidence that department stores will be able to distract consumers from their increasing habit of shopping online and at lowerprice fast-fashion chains like H&MandZara.

Traffic at Macy’s was down 5.5 percent in the quarter.

“Today serves as another reminder of these companies’ inability to reinvent themselves ,” said retail analyst Chuck G rom .“What investors want to hear before investing in them is that they have a strategy to become more relevant .”

Macy’s shares tumbled 10.3 percent, to $20.67 — just shy of their 52-week low of $20.50. Kohl’s shares closed down 5.8 percent, at $39.50, near their 52-week low of $35.16.

Earlier in the week, Michael Kors and Ralph Lauren reported that they are limiting their exposure to department stores to rehabilitate their image and pricing. Ralph Lauren said it will exit up to 25 percent of the department stores it’s currently in by 2018 in a twoyear effort to charge full price for its designer duds.

Nevertheless, Gennette said Macy’s is as committed to discounts as ever, with plans to add its off-price concept Backstage, currently in 38 locations, to still more stores.

“We will remain promotional,” Gennette said, adding that “we expect the fourth quarter to be very promotional — and we’ll have all of our firepower to be ready for that.”

Among the bright spots for Macy’s were women’s shoes, fragrances, active apparel and men’s clothing. Genette is pinning Macy’s comeback on a loyalty program launching in October that’s aimed at the 10 percent of Macy’s customers who represent half of its sales.

Only Nordstrom seems to be pulling itself out of the mire. The Seattle-based retailer had a 1.7 percent rise in same-store sales for the quarter ended July 29. Nordstrom’s net sales rose 3.5 percent to $3.72 billion.

The company said its strength came, in part, from its private-label brands.