Macy's, the largest US department store chain, reported dismal third-quarter earnings and slashed its 2015 profit forecast Wednesday, citing slumping sales ahead of the holiday shopping season.
Shares in Macy's were pummeled after the company reported sales fell 5.2 percent in the July-September quarter from a year ago to $5.87 billion, well below market expectations of $6.09 billion.
Shares closed down 14 percent at $40.44, their lowest level since February 2013.
The company blamed especially weak spending by US customers in key apparel and accessory categories and a downturn in international tourism amid a strong dollar.
"We are disappointed that the pace of sales did not improve in the third quarter, as we had expected," said Terry Lundgren, chairman and chief executive of Macy’s, in a statement.
Predicting lower sales in the fourth quarter, the company cut its full-year earnings forecast by 10.6 percent.
Macy's, the iconic American retailer whose flagship store on 34th Street in New York City is the finish of the annual Macy's Thanksgiving Day Parade, said it was beefing up its digital and mobile strength to meet the increasing consumer shift to online shopping.
The company, which also owns the upscale Bloomingdale's chain, has been under a restructuring and downsizing plan in the past year. It previously announced it would close between 35 to 40 stores in early 2016, among about 800 in the US.
Macy's also announced Wednesday that it had decided not to pursue a spin-off of real estate holdings into an independent Real Estate Investment Trust (REIT) because it "does not offer sufficient upside potential for value creation."
Standard & Poor's said its credit ratings on Macy's were unaffected by the company's earnings report and forecast.
"We believe apparel trends will remain soft in the remainder of 2015 given the heightened industry condition and the shifting trend in consumer spending toward electronics, restaurants, health care, and services," S&P said.
But other apparel retailers appeared to feel the heat from Macy's woes.
Shares in Gap, whose sales in its namesake and Banana Republic brand stores fell in October, extended their losses from Tuesday when the company offered a downbeat outlook on the quarter ended November 1. Gap fell 2.4 percent.
Struggling fashion chain Abercrombie & Fitch tumbled 4.9 percent, Michael Kors dropped 4.2 percent and Ralph Lauren lost 6.2 percent.