* Macy's closing 68 stores, cutting over 10,000 jobs
* Macy's sees sales impact from store closings
* Shares of Macy's and Kohl's plunge
(Adds analyst comment, details on sales impact; updates shares)
By Nandita Bose and Gayathree Ganesan
Jan 4 Department store chains Macy's Inc
and Kohl's Corp both cut their 2016 profit forecasts on
Wednesday, after holiday season sales fell more than expected,
pushing down shares in the retail sector in extended trading.
Macy's shares were down 10.7 percent at $32 and Kohl's
shares plunged 15 percent to $44.11 after hours. Other retailers
were also down sharply, with J.C. Penney Co Inc off 5.3
percent and Nordstrom Inc down 5.4 percent.
U.S. department stores have continued to miss out on the
spending uptick experienced by many retailers and have suffered
heavily from competition by online rivals including Amazon.com
Department stores have also been hurt by a drop in demand
for clothes and accessories like watches and handbags as
consumers spent more on big-ticket items such as home
renovations and cars.
Macy's said it is closing 68 stores, part of a plan
announced last August to shutter 100 stores. The closures, three
of which have already occurred, may result in layoffs of about
3,900 employees and a $575 million impact on 2017 sales, the
company said on Wednesday.
The closures are the latest in a long list of moves by
Macy's to spur growth. It would be the fastest pace at which the
company has closed stores, after shutting a net 77 stores over
"Revitalizing the business will not be easy," said Neil
Saunders, chief executive at retail consultancy Conlumino.
"Shopping trends are firmly against Macy's, and its brand, while
not completely diminished, is most certainly tarnished."
Macy's Chief Executive Officer Terry Lundgren said traffic at
its stores continued to decline even though the online business
"While our sales trend is consistent with the lower end of
our guidance, we had anticipated sales would be stronger,"
Macy's also said it is implementing various efforts to
restructure management and reduce costs, which it expects to
result in the reduction of about 6,200 jobs.
Macy's cut its adjusted profit forecast for the 2016 fiscal
year ending Jan. 30, 2017, to $2.95-$3.10 per share from
$3.15-$3.40 per share previously. Comparable sales on an owned
plus licensed basis fell 2.1 percent in November and December.
Macy's said it will take charges of about $250 million in
the 2016 fourth quarter that were not previously included in its
Macy's said the store closures would bring in total cost
savings of approximately $550 million, starting this year,
enabling it to invest $250 million to expand its digital
business, among other initiatives.
Rival Kohl's said sales were volatile throughout the holiday
season, even though it saw strong sales on Black Friday and the
week before Christmas.
The retailer's comparable holiday sales fell 2.1 percent,
forcing it to cut its adjusted profit forecast for the fiscal
year ending Jan. 30 to $3.60-$3.65 per share from its previous
forecast of $3.80-$4.00.
The National Retail Federation expects holiday sales to rise
3.6 percent. A jump in spending in the final stretch of December
is likely to offset a slow start to the holiday shopping season.
(Reporting by Nandita Bose in Chicago and Gayathree Ganesan in
Bengaluru; Editing by Jo Winterbottom and Leslie Adler)