Macy’s sales slip, says shoppers wary of spending
Posted: 5:36 pm Wed, August 14, 2013
NEW YORK — Macy’s Inc. reported a disappointing profit for its second quarter and cut its outlook for the year on Wednesday. The department store chain blamed shoppers’ reluctance to spend for a rare slip in sales.
The second-quarter weakness raises worries about consumer spending, an important part of the economy, and how other merchants fared during the spring and early summer.
Macy’s, the first of the major retailers to report second-quarter results, has been a standout among its peers throughout the economic recovery. It’s a barometer of spending among middle- to upper-income shoppers.
Wal-Mart Stores Inc., Kohl’s Corp. and Nordstrom Inc. are among the major retailers scheduled to report later this week.
Like other retailers, the Cincinnati-based operator of Macy’s and Bloomingdale’s is grappling with a yo-yo economic recovery that’s making people 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.
“We believe that much of our weakness is due to the health of the consumer and to the fact that consumers seem to be choosing to make purchases in non-department store categories such as cars, housing and home improvement,” Karen Hoguet, Macy’s chief financial officer, said during a conference call with investors.
To lure shoppers back in the store, Macy’s said it is stepping up marketing but declined to offer details.
For the three months that ended Aug. 3, Macy’s said it earned $281 million, or 72 cents per share. That’s short of the 78 cents per share analysts expected. It was the first time Macy’s profit missed expectations since 2007. 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. That was Macy’s first decline since the fourth quarter of 2009.
Macy’s now expects the figure to climb between 2 percent and 2.9 percent for the full year, down from its previous projection of a 3.5 percent increase.
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