Macy's Faults Consumer Wariness for Earnings Shortfall

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macy's earnings retail stocks
Frank Franklin II/AP
NEW YORK -- Macy's reported a disappointing profit for its second quarter and cut its outlook for the year Wednesday, with the department store operator citing shoppers' reluctance to spend for a slip in sales.

Its shares fell 3.4 percent to $46.85 in premarket trading. During the past year, its stock is up almost 27 percent.

Macy's (M), which operates its namesake stores and Bloomingdales, is grappling with a yo-yo economic recovery that's making people more careful about their purchases heading into the heart of the key back-to-school selling period.

Like other retailers, the Cincinnati-based company is grappling with a yo-yo economic recovery that's making people more careful about their purchases heading into the heart of the key back-to-school selling period.


"To see Macy's miss by a wide margin is troublesome, speaking volumes about the health, or lack thereof, of middle America," wrote Brian Sozzi, chief equities strategist for Belus Capital Advisors.

For the period ended Aug. 3, Macy's says it earned $281 million, or 72 cents a share. That's short of the 78 cents a share analysts expected. A year ago, the company earned $279 million, or 67 cents a share.

Revenue slipped to $6.07 billion, also short of the $6.26 billion analysts expected, according to FactSet.

Revenue at stores open a year, a key metric because it strips out the impact of newly opened and closed locations, slid 0.8 percent.

Macy's now expects sales at stores open at least a year to climb between 2 percent and 2.9 percent, down from its previous guidance of a 3.5 percent increase.

While jobs are easier to get and the turnaround in the housing market is showing promise, the improvements haven't been enough to get most Americans to spend more. Most are juggling tepid wage gains with higher costs of living.

On Wednesday, Macy's nevertheless said it was encouraged by its early read on the back-to-school season heading into the third quarter. But other retailers such as teen clothing sellers American Eagle Outfitters (AEO) and Aeropostale (ARO) have cited lots of discounting and warned of a slow start to the period.

Macy's also said that it has been marking down prices after a cool spring and that shoppers are responding positively.

Macy's also lowered its earnings forecast to $3.80 to $3.90 a share, down from the previous outlook of $3.90 to $3.95 a share.

The disappointing results from Macy's don't bode well for J.C. Penney (JCP), which reports next week, Sozzi said.


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109 Comments

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cat5400

My biggest problem with Macy's is their special discounts for those using a Macy's credit card. Also they carry name brand junk made of inferior fabric, poor finishing. Top designers manufacture garbage and put their name on it. And where is cotton? Anyone seen any lately? And take a look a top designer shoes and bags...made like garbage and the prices keep going up....I'm tired of al the inferior junk being sold these days.

August 15 2013 at 2:36 PM Report abuse rate up rate down Reply
mgh406

I have shopped Macys, Target, Sears and others. They all basically sell the same merchandise but Macys prices are well out of line. Also, Macys online prices fluctuate wildly from day to day.

August 15 2013 at 1:25 PM Report abuse rate up rate down Reply
rwilliamhoward

Maybe Macy's should check with the ADVERTISING department. That LOGO, on the front of the building shown looks like the NORTH KOREAN FLAG! White star, red background. The first time I saw their flag, I thought Texaco gasoline. But would you support North Korea? I would not, and will not. Return to the old logo, and do what you USED to do best. Market. Market quality, variety, reasonable prices and customer service.

August 15 2013 at 1:07 PM Report abuse rate up rate down Reply
James

I didn't realize it was my job to keep Macy's in business. If that's the case, I quit.

August 15 2013 at 12:46 PM Report abuse +1 rate up rate down Reply
socal1500

How about carrying sizes in mens dress clothes that arent all SLIM FIT. I am an average size guy but dont like tght dress clothes. 80% of dress pants and shirts at Macys are SLIM FIT. Considering Americas population is more that 50% overweight. The logic would seem to be carry mostly larger/regular sizes not SLIM FIT. Blame Macys inventory buyers.

August 15 2013 at 12:33 PM Report abuse rate up rate down Reply
jamminnana

Did they ever stop to think Macys that is that their PRICES ARE TOO HIGH. Not everyone can afford them.

August 15 2013 at 12:14 PM Report abuse +1 rate up rate down Reply
kafienkarl

Many want to blame government for everything. Well look into wage increases from companies/corporation. Not much in wage increases for many years. Corporations like Macy's want us to use credit cards to go into credit card debt. Something has to give..... how about a raise.

August 15 2013 at 12:14 PM Report abuse rate up rate down Reply
alr126

HOw about the simple fact that Macy's prices are to high?

August 15 2013 at 11:58 AM Report abuse rate up rate down Reply
lilywhyt

Macy's quality has gone in the tank. The customer service is non-existent. Sales people know absolutely nothing about their product.....IF you can find one. I have a Macy's charge card and get coupons in the mail all the time. If you read the coupons, almost anything anyone might want, is excluded. Perfume, jewelry, name brand clothing, home goods, etc. Absolutely absurd. They are losing customers, hence, profit.

August 15 2013 at 11:50 AM Report abuse rate up rate down Reply
1 reply to lilywhyt's comment
James

Macy's is for tourists.

August 15 2013 at 12:47 PM Report abuse rate up rate down Reply
Christine

I wait until thier stuff shows up in Goodwill, and then if it does, and is the right size then I might buy it, otherwise their merchandise is way to expensive for my budget

August 15 2013 at 11:39 AM Report abuse rate up rate down Reply