Macy’s Inc. shares slid $1.96, or 8.2 percent, to $21.90 on Tuesday, their lowest level since February 2011 after the company warned that gross margins will be weaker than forecast as the company struggles to shift inventory.
Macy’s made the comment at an analyst day. Specifically, this year’s gross margins could come in about 60 to 80 basis points lower than originally expected. The company didn’t provide specific reasons for the lower margins, but it’s probably safe to say that excess inventories and deep discounts as a result are playing a major role.
At the company’s annual investor day, Chief Financial Officer Karen Hoguet said that second-quarter gross margins are running about 1 percentage point below what they were last year. The company is slashing costs in a bid to maintain its earnings forecast, which it reaffirmed on Tuesday.
Macy’s bleak Q1 earnings report and guidance last month spurred a big drop in department stores and other retailers
During the investor day meeting, Macy’s said cost cuts and managing its mix of owned versus leased properties would help margins in the future.
