Macy's misses Wall Street estimates; shares tumble

Macy's flagship store in Herald Square, New York City.
Adam Jeffery | CNBC
Macy's flagship store in Herald Square, New York City.

Macy's reported a disappointing profit for its second quarter and cut its outlook for the year on Wednesday, with the department store operator citing shoppers' reluctance to spend for a slip in sales.

Its stock fell more than 3 percent to under $47 in afternoon trading on the New York Stock Exchange.

Macy's, which operates its namesake stores and Bloomingdales, is grappling with a yo-yo economic recovery that's making people more careful about their purchases heading into the heart of the key back-to-school selling period.

While jobs are easier to get and the turnaround in the housing market is showing promise, the improvements haven't been enough to get most Americans to spend more. Most are juggling tepid wage gains with higher costs of living.

On Wednesday, Macy's nevertheless said it was encouraged by its early read on the back-to-school season heading into the third quarter. But other retailers such as teen clothing sellers American Eagle Outfitters and Aeropostale have cited lots of discounting and warned of a slow start to the period.

Macy's also said that it has been marking down prices after a cool spring and that shoppers are responding positively.

For the period ended Aug. 3, the company says it earned $281 million, or 72 cents per share. That's short of the 78 cents per share analysts expected. A year ago, the company earned $279 million, or 67 cents per share.

Revenue slipped to $6.07 billion, also short of the $6.26 billion analysts expected, according to FactSet.

Revenue at stores open a year, a key metric because it strips out the impact of newly opened and closed locations, slid 0.8 percent.

Macy's, based in Cincinnati, now expects sales at stores open at least a year to climb between 2 percent and 2.9 percent, down from its previous guidance of a 3.5 percent increase.

It also lowered its earnings forecast to $3.80 to $3.90 per share, down from the previous outlook of $3.90 to $3.95 per share.