Shares of the retail giant Macy's (NYSE:M) tumbled this quarter. Macy’s stock fell 9% to $42.77 in the premarket on November 11th after the company has released lower than expected third-quarter results.
The retailer posted sales dropped down by 3.6% in the third quarter. Net sales fell to $5.874 billion compared to $6.195 billion in 2014, a decrease of 5.2%. Macy Inc. also recorded net income of $118 million, $0.36 per share, compared to the same period net income of $217 million, $0.61 per share. The Macy Inc. stated that asset impairment charges of $111 million, or 20 cents per share, primarily related to one time cost to close 35-40 stores in early 2016. Excluding one time cost, third quarter earning per share was 0.56 per share.
The chairman and chief executive officer of Macy’s Inc.- Terry J. Lundgren explained factors of declining sales. “Slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s store in tourist center, which are some of our company’s largest-volume and most profitable locations.” he said. Simultaneously, the warmer weather in Northeast affected the sales of winter clothes.
According to press release, Macy’s made a plan on its ongoing business strategy. First, concentrating on its resources in top stores in the best location. Macy’s could take advantage of its selling space to promote the products to attract more customers to increase sales in specific stores. Second, reducing expense and tightening capital spending to operate more efficiently and fund highest-potential growth initiatives. The company thought it could save a lot of operating cost by reducing unnecessary expenditure.
Macy’s Inc. not only reduced the cost but also planed to expand its relationship with Luxottica Group, which already operates 670 Sunglass Hut locations inside Macy’s stores, to open LensCrafters locations up to 500 in its department stores. By cooperating with other enterprise and reducing cost, Macy’s hopes to improve its sales in the following quarters.