Macy’s (NYSE: M) didn’t sell as much merchandise during the holidays as executives had hoped, resulting in the company reporting disappointing sales results for the November and December period. The department store giant reported that comparable sales at stores operating for at least 12 months were up 0.7 percent over a year earlier. When combined with online sales, the rise increased to 1.1 percent.
The results forced the company to slash its annual earnings guidance. Macy’s sales forecasts for the fiscal year 2018 has been revised to no growth in net sales from its previous projection of a 0.3 to 0.7 percent increase. Diluted earnings per share projections were lowered to a range of $3.95 to $4 from a prior range of $4.10 to $4.30. Same-store sales are expected to rise by roughly 2 percent, down from a prior forecast of 2.3 to 2.5 percent.
Retailers make an outsized chunk of their sales during the holiday sales season, so weakness during the period often affects investor sentiment more strongly than during other periods of the year. This appeared to be the case with Macy’s as its stock plunged close to 18 percent after the announcement, marking the steepest drop in the company’s history. Macy’s shares have fallen about 3.5 percent over the past 12 months.
CEO Jeff Gennette said in a statement that the holiday season started strong during Black Friday weekend, but it “weakened in the mid-December period and did not return to expected patterns until the week of Christmas.” Weakness in areas like women’s sportswear and jewelry overshadowed overall sales growth in other areas. The company has been coping with its issues by shrinking its store sizes, adding more discount Backstage locations, and increasing its buy online, pickup in store capabilities.