Macy's shares plummet as department store struggles to reinvent itself

Macy’s saw its shares tumble on Wednesday even though the company reported second quarter earnings and sales that exceeded analysts’ expectations and hiked its full-year expectations.

The department store operator has been struggling to achieve sales growth amid competition from online retailers such as Amazon, and registered quarterly revenue of £5.57bn, beating projections of £5.55bn but still constituting a drop from the prior year figure of $5.64bn.

Looking to the full year, the company said it is now anticipating earning $3.95 to $4.15 per share, 20 cents higher than the company had previously forecast after it stated that all three of its divisions, Macy's, Bloomingdale's and Bluemercury, all "performed well".

Jeff Gennette, chief executive of Macy’s, said: "We […] continue to be disciplined with inventory management, which allows us to give our customers more fashion and freshness, while increasing sales and improving gross margin."

The firm is currently engaged in a number of measures to improve its structure such as trimming excess inventory, revamping stores, leasing excess space at more than 50 locations and growing its off-price business Macy’s Backstage.

Gennette said Macy's will have about 180 Backstage stores open by the end of the third quarter and said that average shopping trips are up two times longer at stores that have a Backstage location inside.

In further efforts to rejuvenate sales, Macy’s also recently acquired the concept store Story, which rotates themes and what it sells every few months, and brought aboard Story’s founder Rachel Shechtman as a "brand experience officer" to create better shopping experiences.

"The combination of healthy stores, robust e-commerce and a great mobile experience is Macy’s recipe for success," said Gennette.

Macy's shares were down 14.14% at $35.95 at 1714 BST.