Macy's shares pummelled as retailer cuts guidance just two months after upgrading it

US retailer Macy’s shocked investors on Thursday morning as it cut full-year sales and earnings forecasts just two months after having upgraded them.

As a result, shares in the Cincinnati-based outfit was on track to turn in a one-day fall ahead of the 17.5% drop recorded during the financial crisis in 2008.

Macy's said the all important holiday trading season had begun with a solid performance on Black Friday, but had then softened halfway through December and that it had been unable to recover until the week leading up to Christmas itself.

The group now expects like-for-like sales to grow 2% in its current trading year - down from the 2.3% to 2.5% growth the firm forecast back in mid-November.

Macy's expects earnings to come in around $3.95 to $4 a share, also a drop compared with its November guidance of $4.10 to $4.30.

Chief executive Jeff Gennette said Macy's had recorded a a strong performance during the Christmas lead up in its fine jewellery, women's shoes, fragrance and dresses trading, however, this had been "largely offset" by an underwhelming performance in areas such as women's sportswear, fashion watches and cosmetics.

"We are revising the guidance we provided in November and will continue to take the necessary steps in January to ensure a clean inventory position as we enter fiscal 2019," he said.

Macy's comparable sales rose 0.7% year-on-year during the November-December period, making it the second consecutive year of improving like-for-like sales in the holiday period.

As of 1540 GMT, Macy's shares had been hammered 19.02% to $25.68 per share.