Macy's Profit Falls, Hurt by Lower Sales
Macy'sreported a quarterly loss Wednesday, hurt by restructuring costs and falling sales, but the department store operator stood by its full-year earnings forecast, and its shares rose 7 percent.
"Given the very difficult economic environment, our company performed relatively well compared to the competition in the first quarter," Chairman Terry Lundgren said in a statement.
He added: "Earnings per share are on track to deliver the annual guidance provided at the outset of the year." The company, which operates its namesake and Bloomingdale's chains, said it lost $59 million, or 14 cents a share, in its fiscal first quarter, ended May 3, compared with a profit of $36 million, or 8 cents a share, a year earlier.
Excluding restructuring costs of 13 cents per share and a reserve of 3 cents per share for a potential litigation settlement, Macy's earned 2 cents per share from continuing operations.
On that basis, analysts on average expected a loss of 2 cents per share, according to Reuters Estimates.
Restructuring to Improve Sales
Macy's , which no longer provides monthly sales updates, is consolidating several regional divisions to cut costs and focus on improving sales at its existing stores.
But it is restructuring its operations at the same time U.S. shoppers have become hesitant with their spending, pulling back on trips to the mall and purchases of clothes, jewelry and furniture as gas prices soar and home values sink.
Macy's said sales fell 3 percent to $5.75 billion from $5.92 billion.
Sales at its stores open at least a year, a key retail gauge known as same-store sales, fell 2.6 percent.
Liz Dunn, a retail analyst with Thomas Weisel Partners, said Macy's same-store sales decline was less severe than those at competitors like Kohl's,J.C. Penney and Nordstrom "Macy's seems to be performing better than others relative to last year in its own stores," she wrote in a research note.
Lundgren said Macy's appears "to be capturing market share even in this period of weak consumer spending." The retailer backed its profit forecast of $1.85 to $2.15 a share for 2008, excluding one-time costs.
It also said it still expects same-store sales for its fiscal year to fall 1 percent to 1.5 percent.
Shares rose $1.69 to $25.75 in early New York Stock Exchange trading.