JCP J C Penney Company Inc

By Lisa Beilfuss 

Macy's Inc. said it would shut 100 more stores, representing about 15% of its store base and about 4% of its annual revenue, in the retailer's latest move to contend with falling foot traffic and sliding sales.

The company's stock has tumbled over the past year as results have disappointed investors. Macy's shares gained 15% to $39.19 Thursday morning, but the stock is still down 42% over the past 12 months.

Despite posting a sharp drop in quarterly profit and another period of declining sales, Macy's helped lift retailers across the spectrum Thursday morning. Shares in fellow department store Nordstrom Inc. rose 8.1%, while J.C. Penney Co. stock gained 6% and Target Corp. shares rose 1.3%.

The move to shutter additional stores comes on top of 40 closures Macy's announced earlier this year. "We operate in a fast-changing world," said Chief Executive Terry Lundgren, and "this involves doing things differently and making tough decisions."

Mr. Lundgren said most of the closures would happen early next year and that the move would enable Macy's to ramp up its digital business. The company said the move would result in job cuts, though it didn't say how many and a spokesman didn't immediately return a request for comment. Certain employees would receive severance pay, the company said.

Mr. Lundgren said in May, after Macy's reported its worst quarterly sales result since the recession, that he wasn't counting on consumers to spend more. Americans have been spending -- the Commerce Department said late last month that personal consumption climbed 4.2% in the second quarter, the best rate since late 2014 -- but what they buy and where they buy it is changing. Shoppers are increasingly opting to make purchases online, especially at Amazon.com, leaving traditional retailers scrambling as foot traffic drops and consumers shell out less on things like clothing and more on services.

During the quarter, sales at Macy's stores open at least a year fell 2%, an improvement from the steep 5.6% decline in the first quarter and less severe than the 4.7% fall analysts expected. Still, it marked the sixth straight quarterly decline.

Jeff Gennette, Macy's president and the designated successor to Mr. Lundgren, said the store closures will shrink sales in the near term. "In the short term, our company's top-line sales will be somewhat smaller, but the changes being made will position us to grow comparable sales more quickly and generate a level of profitability that stands out among retailers," he said.

Annual net sales of the stores flagged for closure are about $1 billion, Mr. Gennette said.

Over all for the latest quarter, Macy's reported a profit of $11 million, or 3 cents a share, down from $217 million, or 65 cents a share, a year earlier. Excluding impairments stemming from store closures, among other items, per-share profit fell to 54 cents from 94 cents.

Along with a 3.9% decline in revenue, to $5.87 billion, promotional pricing bit into earnings. For example, the company held its first "Black Friday in July" event, which Mr. Lundgren said brought in customers and boosted online sales, though at the expense of the bottom line.

Analysts predicted 45 cents in adjusted earnings per share and $5.75 billion in revenue, according to Thomson Reuters.

Macy's backed its view for the year, still forecasting a 3% to 4% slide in same-store sales. The company expects to report $3.15 to $3.40 an adjusted share, bracketing the $3.26 average analyst estimate.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

August 11, 2016 10:06 ET (14:06 GMT)

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