Things went from bad to worse at Macy’s (NYSE: M) earnings report. Quarterly sales growth dropped bigger-than-expected and the company slashed its full-year forecast. While it had previously said it expected a 1 percent decline in sales at stores open more than a year, it is now forecasting a decline of 3.5 to 4.5 percent. Department stores' uphill struggle against slumping demand for apparel.
The disappointed forecast from the retailer dragged its shares down nearly 14 percent to a 4-year low on Wednesday.
The conventional thought has been that as the economy improves, shoppers will start buying clothes to put in their closets and decorate living rooms. Yet, regardless of the unemployment rate is currently near a post-recession low, consumers just aren’t getting ready to spend money on their closets.
“We’re, frankly, scratching our heads. We see the same economic data you all see,” said Karen Hoguet, Macy’s chief financial officer, on a conference call with investors.
“We are not counting on consumers to spend more this year, but we are working on giving them reason to shop more with us,” Hoguet said.
Apparel sales were also hurt by unseasonably cool weather in late March and early April, the season when the retailer starts selling its launch spring collections.
"They need to find a way to bring the shopper in the store, to have product that's emotionally exciting to the consumer, differentiated product that's not available elsewhere," Stifel, Nicolaus & Co analyst Richard Jaffe said.
The giant retail store said earlier this year it’s cutting or relocating approximately 3,000 workers. Besides, it’s closing about 40 department stores, following by an announcement in September.