The department store retailer reported that first quarter sales fell 7.4% year-over-year to $5.77 billion, missing forecasts for $5.94 billion. And same-store sales declined for the fifth straight quarter, falling 5.6% compared to estimates for a 3.8% decline.
But earnings, adjusted for one-time items, came in at 40 cents a share, beating forecasts for 36 cents a share as Macy's bottom line benefited from $130 million in share repurchases made during the quarter. Shares outstanding fell 9.5% year over year as a result of the share repurchases, which had the effect of boosting per share earnings.
Macy's shares plunged almost 9% to $33.70 in pre-market trading Wednesday.
Similar to recent quarters, Macy's said that it continues to experience tepid consumer spending on apparel and other merchandise. "In particular, our sales trend relative to expectations meaningfully slowed beginning in mid-March, and first quarter results are below our original outlook," said Macy's Chairman and CEO Terry Lundgren in a statement,
He added that "headwinds also are coming from a second consecutive year of double-digit spending reductions by international visitors in major tourist markets where Macy's and Bloomingdale's are key destinations, as well as a slowdown in some center core categories."
And despite an improving U.S. labor market, Macy's isn't optimistic about the sales environment for the rest of the year.
"We are not counting on the consumer to spend more, so we are working harder to give customers more reasons to buy from us by delivering outstanding style, quality and value," Lundgren said.
Macy's slashed its full year same-store sales guidance to a decline in a range of 3% to 4% vs. a previous estimate for a 1% drop. For the year, Macy's now sees earnings of $3.15 to $3.40 a share, down from $3.80 to $3.90 a share offered back in February.
To combat sluggish sales, Macy's said it will speed up the roll-out of new outlet stores inside of its full-price locations, and soon introduce exclusive product lines from music stars Lady Gaga and Sir Elton John. The company also said "it continues to review its store portfolio," hinting it may look to close more stores this year than the 35 it previously announced.