[5/11/17] Macy’s quarter ‘pretty ugly’: Jan Kniffen
Macy’s latest earnings report was “pretty ugly,” Jan Kniffen, a consultant to investors in retail companies and a former industry executive, told CNBC on Thursday.
“It sure as heck was not what we expected,” Kniffen said during an interview on “Squawk Box.”
Macy’s reported earnings, revenue and same-store sales — a metric closely monitored for retail stocks by Wall Street — on Thursday that all missed estimates, sending its shares tumbling more than 10 percent.
Meanwhile, department store operators Kohl’s and Dillard’s, which also announced earnings Thursday before the bell, were pretty much “above plan” as far as what they reported, Kniffen said. “But everyone was tough on sales.”
Looking ahead and considering the competitive retail landscape today, all the full-line department stores — Macy’s, J.C. Penney, Nordstrom, etc. — need to shut down more of their brick-and-mortar locations, he said. “Nobody has come down [on store count] enough.”
Macy’s, for example, has announced plans to close up to 100 of its locations this year, in an attempt to slim down its vast real estate portfolio and win more sales on online.
But, the market “probably wants to see another 100 Macy’s stores close,” Kniffen told CNBC.
“You just can’t have 6, 7, 800 stores right now in America if you’re a full-line department store retailer.” Instead, these companies should focus on being a size where they can be “more efficient and more effective,” he suggests.