By Chelsey Dulaney
Macy's Inc. said profit edged down in its holiday quarter on
sluggish sales growth, extending a streak of recent weak results,
while the retailer also gave a muted outlook for 2015.
Adjusted earnings for the latest quarter narrowly topped
expectations, while the top line came in just below forecasts.
For the full year, Macy's projected per-share earnings of $4.70
to $4.80, just missing the $4.84 analysts had expected, according
to Thomson Reuters. Macy's forecast sales growth of 1%, below the
2% growth analysts had expected.
Macy's has posted weak results recently as consumers have spent
more of their disposable income on things such as cars, health
care, and electronics.
The company has said it is hopeful that improvements in the
economy, including lower gas prices, falling unemployment and a
healthy stock market, will benefit the retailer going forward.
Last month, Macy's said it was thinking about starting an
off-price business for its namesake brand, a reminder that
Americans remain value-conscious. The retailer, which started in
1858 as a dry-goods store on the corner of 14th Street and 6th
Avenue in New York City, has also announced plans to strengthen its
e-commerce and open more outlet stores.
The restructuring, which Macy's has said could affect more than
2,000 workers nationwide, is expected to save the retailer about
$140 million a year, starting this year. The latest quarter
included $87 million in charges related to the effort, lower than
its initial forecast as the company was able to place more
associates in new jobs at the company, reducing severance
costs.
Overall for the quarter ended Jan. 31, profit fell to $793
million from $811 million. Per-share earnings were $2.26 a share,
up from $2.16 a share a year earlier, due to fewer shares
outstanding. Excluding the restructuring and store-closing charges,
and other items, per-share earnings were $2.44.
Revenue ticked up 1.8% to $9.36 billion.
Analysts polled by Thomson Reuters had expected $2.40 a share in
earnings and $9.4 billion in revenue.
As the company reported this month, sales excluding newly opened
or closed stores grew 2% in the period, near the low end of its
forecast. When licensed departments are included, sales were up
2.5%.
Gross margin in the current quarter edged down to 40.3% from
40.6% a year earlier.
The holiday quarter has been one of the strongest in years for
the retail industry. Still, weakness has persisted for some
retailers.
Last week, Nordstrom Inc. reported higher fourth-quarter sales,
though profit fell on higher acquisition and technology costs.
Michael Kors Holdings Ltd., meanwhile, recently toned down its
earnings outlook for the current quarter after sales growth slowed
during the year-end holidays, a rare disappointment for a company
that has long been impervious to the retail industry's
sluggishness.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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