CHICAGO, June 6 Macy's Inc margins could
end the year as much as 80 basis points lower than in 2016,
Chief Financial Officer Karen Hoguet warned on Tuesday in
comments that sent shares of the department store chain sliding
to five-year lows, and also pressured other retail stocks.
Hoguet's comments, made during an investor meeting, sent
Macy's shares dropping as much as 7.7 percent.
Competition from Amazon.com Inc and other online
retailers is growing, forcing brick-and-mortar chains to close
stores and cut costs.
Macy's full-year gross margin could be 60 to 80 basis points
lower than in 2016, Hoguet said, and second-quarter gross margin
would be down 100 basis points from the year-ago period.
The margin was 39.4 percent in the fiscal year ended Jan.
28, and 40.9 percent in the fiscal 2016 second quarter.
Macy's, an American retail icon that also owns luxury chain
Bloomingdale's, has struggled with several quarters of declining
sales even as Executive Chairman and former CEO Terry Lundgren
made changes in operations.
"I think this is proof that while Macy's talks a good game,
on the ground very little has changed in stores," Neil Saunders,
managing director of GlobalData Retail, said.
"It isn't really a surprise but it is slightly disappointing
because the company has been doing some things to try and turn
Macy's is closing underperforming stores, revamping its
beauty business, simplifying pricing, building up its Backstage
discount business, and improving its e-commerce site.
CEO Jeff Gennette, who took charge of the retailer in March,
is planning for 40 percent of store merchandise to be exclusive
to Macy's by 2020. The company is also looking to monetize its
real estate assets, and hired Brookfield Asset Management in
November to create development plans for about 50 Macy's real
Macy's is "doing everything it can to be productive," Hoguet
said, adding that she hoped cost reduction efforts would improve
In May, Macy's blamed its lower first-quarter gross margin
mainly on higher-than-expected inventory levels at the end of
Another executive on Tuesday's call told investors that
Macy's still has too much inventory in stores and that the
company was working on reducing this.
(Reporting by Richa Naidu; additional reporting by Nandita
Bose; editing by Richard Chang and David Gregorio)