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Earnings

RETAILING : Macy Has 1st Quarterly Profit in 2 Years

February 26, 1991|STUART SILVERSTEIN | TIMES STAFF WRITER

Thanks largely to a onetime gain from buying back junk bonds, R. H. Macy & Co. on Monday reported its first quarterly profit in two years.

The big New York-based retailer, which owns the Bullock's and I. Magnin stores in Southern California, posted net income of $78 million on sales that fell 9.4% to $2.2 billion in its second quarter ended Feb. 2.

Excluding the company's one-time gain of $85.3 million from buying back junk bonds at a discount, Macy's loss in the quarter narrowed to $7.3 million. In the same quarter a year earlier, Macy's lost $39 million.

The last time Macy's reported a net profit was in the second quarter that ended in January, 1989, when it made $72.6 million. Analysts credited Macy's with managing its inventories well in the past quarter, accurately anticipating the weak Christmas shopping season.

Macy's also reported progress on two fronts in its efforts to reduce its burdensome debt of more than $5 billion, which stems largely from the leveraged buyout that took the company private in 1986 and from its 1988 acquisition of Bullock's and I. Magnin.

The company announced that it and General Electric Capital Corp. have signed a summary of the principal business and financial terms of their previously announced deal for GE Capital to buy Macy's credit card business. The sale, which would reduce Macy's debt by more than $1 billion, is scheduled to close by March 31. It awaits final documentation and lender approvals, Macy's said.

In addition, Macy's announced the closing of an additional investment of $13.1 million into the company by Corporate Property Investors, a shopping center development firm. Last year, CPI bought a 1% stake in Macy's with a $15-million investment. The size of CPI's expanded stake in Macy's was not disclosed.

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