Macy's cuts profit outlook as challenging holiday season looms

Macy's has been under a restructuring and downsizing plan in the past year. It previously announced it would close between 35 and 40 stores early next year among about 800 in the United States.
Macy's has been under a restructuring and downsizing plan in the past year. It previously announced it would close between 35 and 40 stores early next year among about 800 in the United States.PHOTO: BLOOMBERG

NEW YORK • Warm weather, low spending by tourists and a pile-up of unsold inventory prompted Macy's to cut its full-year forecast on Wednesday, into what is shaping up to be a challenging holiday season.

Macy's said it was beefing up its digital and mobile strength to meet the increasing consumer shift to online shopping.

The American company, which also owns the upscale Bloomingdale's chain, has been under a restructuring and downsizing plan in the past year. It previously announced it would close between 35 and 40 stores early next year, among about 800 in the United States.

Macy's also said in a quarterly report it would not create a real estate investment trust for its stores, disappointing some investors and helping to push down its share price 14 per cent for the day.

Macy's chief executive Terry Lundgren said in a conference call that he was not happy with the company's performance in the quarter ended Oct 31. Sales at stores open for at least a year fell 3.6 per cent in their third straight quarterly decline.

Analysts on average had expected 0.2 per cent growth, according to research firm Consensus Metrix.

Macy's said it expected same-store sales to fall by 1.8 per cent to 2.2 per cent for the year ending in January.

The company cut its full-year profit forecast to US$4.20 (S$6) to US$4.30 per share, excluding special items, from a prior range of US$4.70 to US$4.80.

"We are disappointed that the pace of sales did not improve in the third quarter as we had expected," Mr Lundgren said.

Macy's slide in sales has lasted several quarters and Mr Lundgren said the company would increase the focus of its turnaround plan, including product mix in stores and more experimentation with online sales.

The retailer will also look for ways to profit from or redevelop its real estate.

REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on November 13, 2015, with the headline 'Macy's cuts profit outlook as challenging holiday season looms'. Print Edition | Subscribe