Macy’s executives discussed several worrisome trends in its business and in retail in general during an earnings call Wednesday.
The company’s results came in below expectations with same-store sales falling 3.6%.
Sales trends slowed substantially from the first half of the year.
“Clearly, something changed in the third quarter,” CFO Karen Hogue said.
Macy’s cited several reasons for weaker than expected results – sales in tourist areas slowed even more because of the stronger dollar; warmer than usual weather in October led to very tepid sales of seasonal categories; some large brands carried at Macy’s performed poorly.
Some of the conversation on the call centered around younger customers being very attracted to lower price points, especially in apparel, an issue that is beginning to impact a range of retailers and brands.
Macy’s executives believes it is a major generational shift, and that’s why the company is testing moving its new off-price concept, Backstage, into some mainline Macy’s stores.
Macy’s will allot about 20,000 to 30,000 square feet to the Backstage concept in about 10 Macy’s stores to test a hybrid store model, mostly in mid-tier markets.
The company also said because of slow sales during the third quarter, it has lots of extra inventory it will need to liquidate in Q4, an unfortunate way to start the holiday shopping season.
Macy’s lowered its same-store sale guidance for the year, and now expects same-store sales to decrease 1.8% to 2.2%. Previously, the company had forecast flat same-store sales for 2015.
