Same-store sales fell by 7.4% at Macy’s in the first quarter and that marks the fifth straight quarter of sales declines for the department store.
“We are seeing continued weakness in consumer spending levels for apparel and related categories,” Terry J. Lundgren, Macy’s chairman and chief executive officer, said in a statement.
Shares at Macy’s fell by 8% in early morning trading on Wednesday and plunged to a 13% loss by 11am Central time.
The current situation is reminiscent of the problems being suffered by Sears. Traffic is down, stores are underinvested, and large discounts have led customers to expect ever lowering prices from the retail chain.
“The blunt truth is that Macy’s does not give consumers a reason to visit its stores,” Neil Saunders, CEO of retail consulting firm Conlumino, wrote in a note to clients Wednesday. “In many locations shops are simply not up to par: they are poorly merchandised, hard to shop, lack any inspiration, and have fairly mediocre customer service. Some of this is about a lack of capital investment, but some
“In many locations shops are simply not up to par: they are poorly merchandised, hard to shop, lack any inspiration, and have fairly mediocre customer service. Some of this is about a lack of capital investment, but some is about a lack of basic shop-keeping standards,” he added.
While Sears has lost 68% of its value in the last year, Macy’s is down 47%.
Both retail giants have been forced to layoff workers, shudder stores, and re-align their business practices to focus on fast fashion and discount programs such as Macy’s Backstage.
“The attempt to shift perceptions are hampered by Macy’s muddying the water by including the Backstage discount concept in mainstream stores,” Saunders writes.
“This serves to underline that Macy’s is both struggling to make its existing space productive, and that it still lacks the differentiation and brand strength to pull in customers on the back of its full price offer. In our view it is a move that will confuse both the proposition and customers,” Saunders says.
The company was also hurt by a warmer than expected winter season which led to a reduction in warm weather clothes, something that was felt by much of the apparel industry.