Macy's Sales Fall; Execs Voice Optimism

CINCINNATI-Macy’s Inc.’s second-quarter sales fell during the second quarter, though Karen Hoguet, the company’s chief financial officer, stressed in a conference call that executives are optimistic for the year’s second half. Through the quarter, which ended Aug. 4, total sales dropped 1.7%, to just under $5.9 billion, and same-store sales fell 2.6% year over year.

“The economic environment is feeling more challenging than we had anticipated in the first part of the year,” Hoguet says. Weak apparel sales and increased markdowns also hurt margins, while an economic slowdown in Florida hurt Macy’s performance in that region, she says.

However, the end of the second quarter saw improvements in the company’s home and furniture departments, and its luxury Bloomingdales stores continue to perform well. Stores acquired by the retailer from May Department Stores two years ago are also performing better, she says. “The upscale customer segment appears still appears to be strong,” Hoguet says. “We are feeling better about our home business than we have for a while.”

Management predicts that same-store sales will come in between a 1% drop and a 1% gain during the third quarter and forecasts a flat-to-2% gain in the fourth quarter. Total Q3 sales are seen between $5.9 billion and $6 billion, and in the fourth quarter, from $8.8 billion to $9 billion.

Macy’s earnings-per-share came in at 16 cents during the second quarter, down from 51 cents during the same year-ago period, due in part to $97 million in integration costs due to the May acquisition. Management sees Q3 earnings coming in between 5 cents and 10 cents and from $1.70 to $1.80 during the fourth quarter.

Macy’s opened one store and closed a unit during the second quarter. The company operates about 850 stores across the country. Addtionally, the retailer recently announced that it is moving its Chicago distribution to Minooka, IL.