Tags: Macys | Profit | Earnings | Sales

Markdowns on Delayed Merchandise to Hurt Macy's Profit

Wednesday, 13 May 2015 01:54 PM

Macy's Inc. forecast a lower second-quarter profit as it marks down merchandise received late due to a strike at West Coast ports and foreign tourists spend less as the dollar stays strong.

Shares of the company, which also reported a drop in first-quarter profit, fell 3 percent to $63.40 on Wednesday.

Macy's, which operates the upscale Bloomingdale's chain as well as its namesake stores, said first-quarter profit and sales were also hurt by colder-than-usual weather in February.

U.S. retail sales remained unchanged in April as households cut back on purchases of automobiles and other big-ticket items.

Macy's expects its second-quarter profit to be less than the 80 cents per share it earned a year earlier, which will make it the company's third straight quarter of lower profits.

Macy's said in February that about 12 percent of its first-quarter merchandise was being delayed due to the strike in West Coast ports, and this would hurt sales, gross margin, and expenses in the first few months of the year.

The company was making sure it would not carry any of the delayed inventory into the third quarter, Chief Financial Officer Karen Hoguet said on a call with analysts.

Tourist spending at Macy's and Bloomingdale's stores in New York City, Chicago, Las Vegas and other cities were down in double digits in percentage terms in the first quarter, Hoguet said.

She estimated that roughly 5 percent of the company's annual sales came from international tourists.

Macy's increased its share repurchase program by $1.5 billion, bringing the total outstanding authorization to about $2.1 billion.

It raised its quarterly dividend to 36 cents per share from 31.25 cents.

Same-store sales, including licensed departments, fell 0.1 percent, while analysts were expecting 1 percent growth.

Macy's is moving into off-price retailing as it tries to attract bargain-hungry shoppers who are not its traditional customers.

The company said this month it will open four pilot off-price stores, averaging about 30,000 square feet, in fall 2015 in New York, with one testing a cafe concept.

The department store operator's net income fell 14 percent to $193 million, or 56 cents per share, in the first quarter ended May 2.

Net sales fell 0.7 percent to $6.23 billion.

Analysts on average had expected earnings of 62 cents per share on revenue of $6.32 billion, according to Thomson Reuters I/B/E/S.

© 2017 Thomson/Reuters. All rights reserved.

 
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Macy's Inc. forecast a lower second-quarter profit as it marks down merchandise received late due to a strike at West Coast ports and foreign tourists spend less as the dollar stays strong.
Macys, Profit, Earnings, Sales
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2015-54-13
Wednesday, 13 May 2015 01:54 PM
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