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Macy's Quarterly Profit Tumbles 39 Percent as Sales Plunge

Macy's Quarterly Profit Tumbles 39 Percent as Sales Plunge
(AP/Mark Lennihan)

Thursday, 11 May 2017 08:17 AM

Department store operator Macy's Inc. reported a lower-than-expected quarterly profit, as sales continued to tumble and as higher inventory weighed on margins.

The company's shares dropped 9 percent in premarket trading on Thursday.

Sales at Macy's stores open at least a year, including sales in departments licensed to third parties, fell 4.6 percent in the first quarter.

That was steeper than the 3.5 percent drop expected by analysts polled by research firm Consensus Metrix.

Macy's merchandise inventories were up 4.2 percent in the quarter, pressuring margins.

In contrast, a leaner inventory and lower costs helped rival Kohl's Corp. report a better-than-expected quarterly profit earlier on Thursday.

However, Kohl's shares were also down 2.6 percent in premarket trading, as its sales and comparable-store sales also fell more than expected.

Kohl's, Macy's and rivals such as J.C. Penney Co. Inc. are struggling with declining mall traffic and tough online competition, and are trying to cope by cutting costs through store closures, selling or leasing their real estate and keeping inventory levels low.

Net income attributable to Macy's shareholders fell to $71 million, or 23 cents per share, in the quarter ended April 29, from $116 million, or 37 cents per share, a year earlier.

Excluding items, the company earned 24 cents per share, well below the 35 cents analysts on average had expected, according to Thomson Reuters I/B/E/S.

Net sales fell 7.5 percent to $5.34 billion, falling for the ninth straight quarter and missing the average analyst estimate of $5.47 billion.

Meanwhile, rival Kohl's reported a better-than-expected quarterly profit, helped by lower costs and a leaner inventory amid a tough retail environment in the United States.

Kohl's sales and comparable-store sales both fell for the fifth straight quarter and missed analysts estimates in the latest three-month period ended April 29, Reuters reported.

Customer traffic at Kohl's stores improved in March and April after a weak February, Chief Executive Kevin Mansell said in a statement.

Kohl's net income soared to $66 million in the first quarter from $17 million a year earlier, when it recorded a $64 million charge related to impairments and store closures.

The company said merchandise inventories fell 2.3 percent, while selling and general expenses fell 3.3 percent in the latest quarter.

On a per share basis, Kohl's earned a profit of 39 cents, beating the average analyst estimate of 29 cents, according to Thomson Reuters I/B/E/S.

Kohl's net sales dropped 3.2 percent to $3.84 billion, missing the average analyst estimate of $3.90 billion.

Sales at stores open more than a year fell 2.7 percent, much steeper than the 1.1 percent decline expected by analysts polled by research firm Consensus Metrix.

© 2019 Thomson/Reuters. All rights reserved.

   
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Department store operator Macy's Inc. reported a 39 percent drop in quarterly profit, hurt by a decline in sales and as higher inventory weighed on margins.
macys, profit, sales, shoppers, stores, retail
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2017-17-11
Thursday, 11 May 2017 08:17 AM
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