BUSINESS

Macy's reports slowing sales, CEO to step aside

Alexander Coolidge
acoolidge@enquirer.com

Macy's reported on Tuesday its 2016 profit dropped 42 percent to $619 million, while sales for the year declined 4.5 percent to $25.8 billion at the struggling department store retailer.

In the quarter ended Jan. 28, the Downtown Cincinnati-based company posted a $475 million profit, down 12.7 percent from the same period a year earlier. Sales also slid 4 percent to $8.5 billion.

Earnings per diluted share excluding one-time items was $2.02 – ahead of Wall Street analysts’ forecasts of $1.97. However, the retailer’s fourth-quarter sales fell slightly lower than estimates.

Macy’s shares closed down a penny to $32.29 Tuesday.

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Macy's has struggled to find sales growth in the past two years. The company is under investor pressure to right its course after its stock price has been chopped in half since hitting an all-time high in summer 2015.

“Looking at the continued challenges in the retail environment and changing consumer shopping behaviors, we know we must evolve our strategy and execute faster," CEO Terry Lundgren said in a statement.

Also on Tuesday, Macy's disclosed its previously-announced succession will occur on March 23, with company president Jeff Gennette taking over as CEO. Lundgren will become the company’s executive chairman.

Looking ahead, Macy's expects sales in 2017 to decline from the previous year, even when adjusted for the 66 stores being shuttered in the first half of the year. Sales on a comparable stores basis will decline between 2.2 percent and 3.3 percent or drop 2 percent to 3 percent including store space leased to vendors. Total sales are expected to be down between 3.2 percent and 4.3 percent in fiscal 2017.

Last month, Macy's announced another wave of cost-cutting. The company said it will cut 10,100 jobs and shutter 68 stores nationwide as part of a massive corporate restructuring that will save it $550 million a year.

Besides slashing jobs and stores, the retailer has also sold off real estate to developers.

Earlier this month, the Wall Street Journal reported Macy's was in early talks with Toronto-based Hudson's Bay Co. about a potential merger, real estate deal or alliance. Hudson's Bay, a smaller company, owns Macy's rival Saks Fifth Avenue and other retailers.