Macy’s cuts full year sales, profit forecast
Disappointing second quarter sales at Macy’s prompted the nation’s leading department store operator to temper its outlook for the remainder of the year, heightening concerns about the health of the consumer just as other major retailers are due to report financial results in the weeks ahead.
Sales declined 0.8% to slightly more than $6 billion and same store sales fell by a similar amount during the second quarter period ended August 3. Profits increased 7.5% to 72 cents from 67 cents, but that figure was six cents less that analysts forecast.
"We had planned our second quarter sales with a lower increase than the first quarter because of a shift in a major promotional event,” said Macy’s chairman, president and CEO Terry Lundgren. “Even so, second quarter sales performance was softer than anticipated, and we are disappointed with the results. Our performance in the period, in part, reflects consumers' continuing uncertainty about spending on discretionary items in the current economic environment. After a cool spring, we have taken appropriate markdowns and customers are responding favorably.”
He added the company was encouraged by a strengthening of the sales trend in key elements of women's ready-to-wear, a category which has lagged over the past couple of years. Also, sales at the Bloomingdales banner rebounded in the second quarter and back-to-school seasonal sales are encouraging, according to Lundgren.
Even so, the positive signs were not enough for Macy’s to maintain the company’s full year sales and profit forecast. Same store sales in the back half of the year are forecast to range from 2.5% to 4% which equates to a full year increase in the range of 2% to 2.9%, well below an earlier forecast that called for an increase of 3.5%.
Reduced expectations for sales resulted in a downward profit forecast. The company now expects full year earnings in the range of $3.80 to $3.90, compared to an earlier forecast of $3.90 to $3.95.
According to Lundgren, Macy's has intensified marketing support throughout the second half of the year to emphasize the fashion and value it delivers.
"We believe we have the right strategies in place at Macy's and Bloomingdale's, particularly in the omnichannel and online initiatives that are driving our business to a new level of shopping accessibility for our customer,” Lundgren said. “Our My Macy's localization and Magic Selling customer engagement strategies continue to differentiate the Macy's shopping experience.”