US department store operator Macy's has today reported a much bigger than expected drop in quarterly profit and sales.
The company is continuing its uphill struggle to attract customers amid a slump in demand for clothes and the shift towards shopping online.
Macy's shares fell as much as 11% today to levels last seen in 2011, and pulled down shares of rivals across the department store industry.
Sales at Macy's stores open at least a year, including sales in departments licensed to third parties, fell 4.6% in the first quarter.
That was steeper than the 3.5% drop analysts polled by research firm Consensus Metrix had expected.
Macy's and other department store chains, such as Kohl's and JC Penney, have struggled for years with declining mall traffic and tough online competition, and are trying to cope by cutting costs via store closures, selling or leasing their real estate and keeping inventory levels low.
While such efforts helped Kohl's to some extent in the latest quarter, they are yet to bear fruit at Macy's.
Merchandise inventories at Macy's rose 4.2% in the quarter, due to a low sell-through. As a result, the company's profit sank 39% to $71m.
In contrast, inventories fell 2.2% at Kohl's, helping the retailer post a better-than-expected quarterly profit.
Kohl's efforts to speed up its supply chain, localise merchandise in stores and use stocks in stores to fulfill online orders helped keep inventories low and boost margins, its chief executive Kevin Mansell said.
However, the company's same-store sales fell 2.7%, much steeper than the 1.1 percent drop analysts' had estimated.
Macy's said its net sales fell 7.5% to $5.34 billion, declining for the ninth quarter in a row and missing the average analyst estimate of $5.47 billion.
