Macy's Lowers 2015 Guidance
January 29 2016 - 9:50AM
Dow Jones News
Macy's Inc. on Friday lowered its 2015 profit guidance due to a
shift in when the retailer will book a gain related to the
redevelopment of a Brooklyn store.
Macy's shares fell 1.3% to $39.07 a share in premarket
trading.
Macy's is redeveloping its Fulton Street location with Tishman
Speyer, which has bought a portion of the store and parking
facility for $270 million. Macy's plans to use $100 million to
redevelop the lower floors of the store, while Tishman will turn
its portion of the building into office space.
Macy's had expected to book a $250 million gain from the
transaction in its fourth quarter. But it now expects to book just
$86 million of the gain in the quarter and the rest in the 2016 and
2017 fiscal years.
As a result, Macy's now expects adjusted 2015 earnings of $3.54
to $3.59 a share, down from its forecast of $3.85 to $3.90 a share
given earlier this month. Those forecasts exclude charges related
to its cost-cutting plans unveiled earlier this month and store
closings.
For the fourth quarter, Macy's is expecting earnings of $1.85 to
$1.90 a share, down from its earlier guidance of $2.18 to
$2.23.
Macy's will report fourth quarter results on Feb. 23.
Macy's already cut its forecast for the quarter and full year
earlier this month, as it unveiled plans to shed $400 million in
annual costs by cutting thousands of jobs.
At that time, Macy's said it hired an investment bank to help it
pursue joint ventures for its malls and flagships in big markets
like Manhattan and San Francisco.
Macy's had been under pressure from activist investor Starboard
Value LP to unlock value from its real estate. In November, the
company shot down the possibility of spinning off properties into a
publicly traded real-estate investment trust. Instead, Macy's said
it planned to redevelop portions of its stores.
The company's sales have been crimped by unusually warm weather
through much of the Northeast and by lower spending in its stores
by international tourists due to the strong U.S. dollar.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
January 29, 2016 09:35 ET (14:35 GMT)
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