Macy’s (NYSE:M) second-quarter earnings fell way below analysts’ expectations, as heavy markdowns used during the spring season to clear unsold merchandise weighed on profits.
Macy’s also lowered its profit outlook for the full year and now is expecting to earn between $2.85 and $3.05 a share, down from a range of $3.05 to $3.25.
"Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women’s sportswear private brands, slow sell-through of warm weather apparel and the accelerated decline in international tourism," CEO Jeff Gennette said in prepared remarks.
"We took markdowns to clear the excess Spring inventory and are entering the Fall season with the right inventory to meet anticipated customer demand," he added.
Net income dropped to $86 million, or 28 cents a share, from $166 million, or 53 cents, a year ago. That missed analysts expectations for 45 cents.
Net sales fell to $5.546 billion from $5.572 billion a year ago, slightly beating expectations for $5.542 billion.
Sales at Macy’s stores and its website operating for at least 12 months were up 0.3%, short of expectations for growth of 0.4%.
Department stores are increasingly under pressure with more people shopping online, renting clothes and accessories from places like Rent the Runway and buying directly from brands instead of going to the mall. Macy’s certainly hasn’t been immune to these struggles.
Shares in Macy’s got roughed up $3.37, or 17.4%, to $16.00
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