(Reuters) -Macy’s M.N on Wednesday cut its annual profit forecast, sending shares down 8%, as weak sales at its eponymous stores have forced it to lean on increased promotions during the holiday season.
The company has been shuttering underperforming stores as it looks to cut costs. It increased its target of Macy’s store closures this year once again to 65 stores from 55 in August.
Macy’s expects annual adjusted profit per share of $2.25 to $2.50 compared with prior expectation of $2.34 to $2.69, which was adjusted for an accounting error.
It had last month said a single employee “intentionally” made wrong entries to hide about $151 million of delivery expenses between the fourth quarter of 2021 through third quarter of 2024.
The company had then delayed its third-quarter results and issued preliminary sales figures that missed market estimates.
Before disclosing the error, Macy’s had forecast a profit of $2.55 to $2.90.It said on Wednesday its adjusted profit forecast accounts for a full-year estimated delivery expense impact of $79 million.
The company is in the middle of a turnaround effort under CEO Tony Spring and has had to rely on its luxury outlets Bloomingdale’s and Bluemercury to lift sales, even as shoppers defer purchases at its nameplate stores.
It had seen comparable sales ahead of third-quarter levels across its portfolio so far in the holiday period, Spring said in a statement.
The department store chain raised its annual net sales target to $22.3 billion to $22.5 billion from $22.1 billion to $22.4 billion expected earlier.
The company has been the target of two activist investor actions this year, with the latest coming from Barington Capital and Thor Equities, who have pushed it to explore options for Bloomingdale’s and Bluemercury, and create a separate unit for its real estate business.
As of last close, Macy’s had a market capitalization of $4.6 billion. The company’s shares have fallen about 17% this year.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Arun Koyyur)
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