Macy's says 2Q profit falls, cuts outlook for year
NEW YORK -- Macy's Inc.'s saw its second-quarter earnings drop slightly and warned today that full-year profits will be below Wall Street expectations as shoppers are more cautious about spending.
The department store operator earned $73 million, or 17 cents per share, in the quarter ended Aug. 2, compared with $74 million, or 16 cents per share, a year earlier.
This year's results include two unusual items that cut earnings by 12 cents per share. Excluding those items, Macy's earned 29 cents per share from continuing operations.
Revenues fell to $5.7 billion from $5.9 billion. Macy's says that same-store sales, or sales at stores opened at least a year, dropped 2.1 percent. Same-store sales are considered a key indicator of a retailer's health.
Analysts surveyed by Thomson Reuters had expected earnings of 19 cents per share on revenue of $5.75 billion.
Macy's results came as the Commerce Department reported that July's retail sales were the weakest in five months as economic problems, from high gas prices to tighter credit and a weaker job market, combined to blunt the impact of billions of dollars in government stimulus payments to U.S. households. The monthly report showed that sales at department stores and other general merchandise stores rose by 0.3 percent, just half the 0.6 percent June increase.
"Our organization rose to the challenge and delivered strong second-quarter earnings and cash flow, despite the poor economic environment," said Terry J. Lundgren, Macy's chairman, president and chief executive in a statement. "While we are never fully satisfied when sales are down, we continued to outperform most of our major competitors in same-store sales and to gain market share with a combination of differentiated merchandise, current fashions and great value."
The company has seen disappointing sales and resistance from shoppers in some markets, where the Macy's name replaced local favorites it absorbed when it bought May three years ago. The company is aiming to fix the problems. A reorganization, announced in February, means the concentration of more managers in local markets where they will make more decisions.
Macy's unusual items this year related to that consolidation of three of the company's regional divisions announced in February, which is expected to save $100 million per year beginning in 2009. It also wrote down by $50 million the value of the private brands acquired in its acquisition of The May Department Stores Co. in 2005.
