Macy's Profit Tops Expectations, Despite Lower Sales
Retailer Macy's posted a better-than-expected quarterly profit on Tuesday despite a drop in sales, sending its shares up 3 percent.
Earnings came to $750 million, or $1.73 a share for its fiscal fourth quarter ended Feb 2, compared with $733 million, or $1.40 a share, a year earlier.
Excluding integration costs and a non-cash tax credit, Macy's earned $1.65, topping analysts' average expectation of $1.60 a share, according to Reuters Estimates.
Still, sales at the owner of its namesake and Bloomingdale's chains fell 6.2 percent to $8.6 billion, amid a persisting weakness in consumer spending.
Sales at stores open at least one full fiscal year, or same-store sales, fell 2 percent in the quarter.
Macy's has struggled to boost sales in recent months at former May Department Stores, which it bought in 2005 and converted to the Macy's name.
Adding to its trouble, U.S. shoppers, hard-pressed for cash in a tottering economic environment, have cut their shopping trips to malls as they reserve their spare dollars for rising food and fuel costs instead.
The cutback has affected many U.S. department store operators.
For instance, J.C. Penney reported a drop in its profit and sales last week, and said it did not see any indication that the consumer environment would improve in 2008.
Earlier this month, Macy's said it would close several regional division headquarters and cut about 2,300 jobs, and in December, said it would close nine underperforming stores in markets such as Indiana, Louisiana and Texas.
Macy's said it will no longer report sales on a monthly basis, effective with 2008. The company had said earlier that that it will not give quarterly sales or earnings outlook.
As announced with its restructuring plans, Macy's expects to earn $1.85 to $2.15 a share, excluding one-time costs for fiscal 2008.
It expects same-store sales in the range of down 1 percent to up 1.5 percent for the year.
Macy's shares were up 3 percent to $25.50 in premarket trading from Monday's close of $24.76 on the New York Stock Exchange.