Macy’s shares tanked in late trading, taking other retailers down with it, after slashing its earnings outlook and announcing it will reduce its workforce by 6,200, or 4 percent.
According to a report, Macy’s was prompted to lower its guidance after a slow holiday season. Macy’s now expects profit of $2.95 to $3.10 a share, which is lower than the $3.40 a share it had previously projected.
“We had anticipated sales would be stronger,” Chief Executive Officer Terry Lundgren said in a statement, according to a report in CNBC. “Ongoing weakness in handbags and watches negatively impacted our results.”
Macy’s reported comparable-store sales fell 2.1 percent from a year earlier both in November and December, which was at the low end of Macy’s projections. It still expects sales to decrease 2.5 percent to 3 percent for the full fiscal year, which ends in January. Looking out to next year, Macy’s is targeting sales to be similar to sales in November and December, noted the report.
Macy’s said cost cutting should result in savings of $550 million in 2017, which is higher than its past goal of savings from cost cuts of $500 million. Macy’s gave that guidance in 2015, noted CNBC. Macy’s plan is to focus on eCommerce, China operations and other businesses.
“We have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time,” Lundgren said, noting the trends are still challenging, reported CNBC. Meanwhile, Kohl’s also slashed its outlook, which sent shares down 10 percent. According to MarketWatch, the company expects 2016 earnings of $2.92 to $2.97 a share, down from the past guidance of $3.12 to $3.32 a share. The company also cited weakness during the holiday selling season. News of Macy’s and Kohl’s dismal reports and outlooks sent shares of other traditional retailers lower in late trading.