By Chelsey Dulaney
Macy's Inc. on Wednesday cut its sales guidance for the year
after reporting steeper-than-expected slides in sales and profit in
its second quarter.
Chief Executive Terry J. Lundgren said the company was
disappointed with its second-quarter results, but said Macy's
expects improvement in the second half of the year.
Still, Macy's cut its forecast for sales excluding newly opened
or closed stores, calling for the metric to be flat. It had
previously forecast growth of 2%. It expects total sales to fall
1%, compared with its previous forecast for 1% growth.
Shares in the company fell 2% to $66.20 a share in premarket
trading.
The company backed its earnings outlook of $4.70 to $4.80 a
share, primarily because of a $250 million gain from the sale of
real estate in downtown Brooklyn also announced on Wednesday.
Macy's has come under pressure from activist investor Starboard
Value LP to spin off its property in recent months. The retailer
has said it is evaluating spinoffs and other property moves. Macy's
said Wednesday that it has brought on real estate advisors to
"intensely study" its real estate portfolio for opportunities.
Meanwhile, Macy's reported a 2.1% decline in same-store sales
for the second quarter ended Aug. 1. When licensed departments are
included, sales fell 1.5%, steeper than the 1.3% drop analysts had
forecast, according to Consensus Metrix.
The results extend a rough patch for a chain that dominates the
department store landscape but is having trouble posting solid
growth as shopper habits change. The company has been hurt recently
by trouble at West Coast ports and lower spending by tourists.
Earlier this year, the company reassigned two top executives to
focus on initiatives like a budding outlet business designed to
take the company beyond its traditional mall-based operations.
The company has also announced plans to open off-price stores
called Macy's Backstage, and add higher end merchandise at its 150
best performing stores.
In all, profit fell to $217 million, or 64 cents a share, from
$292 million, or 80 cents a share, a year earlier. Analysts polled
by Thomson Reuters had expected 76 cents a share in earnings.
Total sales fell 2.6% to $6.1 billion, missing analysts'
estimates for $6.23 billion.
Gross margin narrowed to 40.9% from 41.4% a year earlier.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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