Macy's Posts Downbeat Q3 Sales, Lowers Full-Year Outlook

Shares of Macy's, Inc. M dropped 9 percent in pre-market trading after the company reported downbeat sales for the third quarter and lowered its forecast for the year. The Cincinnati, Ohio-based company posted a quarterly profit of $118 million, or $0.36 per share, versus a year-ago profit of $217 million, or $0.61 per share. Excluding items, the company's adjusted earnings came in at $0.56 per share. Its total sales slipped 5.2 percent to $5.87 billion. However, analysts were expecting earnings of $0.54 per share on revenue of $6.09 billion. The average estimate among 79 Estimize users was for earnings of $0.52 per share and revenue of $6.14 billion. Macy's comparable sales on an owned plus licensed basis dropped 3.6 percent, while comparable sales on an owned basis shrank 3.9 percent. In the third quarter, the company repurchased around 16.7 million shares of its common stock for a total of $900 million. "We are disappointed that the pace of sales did not improve in the third quarter, as we had expected. Spending by domestic customers remained tepid, especially in key apparel and accessory categories. Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy's and Bloomingdale's stores in tourist centers, which are some of our company's largest-volume and most profitable locations," said Terry J. Lundgren, chairman and chief executive officer of Macy's, Inc. For the full year, Macy's now expects earnings of $4.20 to $4.30 per share, versus earlier forecast $4.70 to $4.80 per share. The company now projects comparable sales to drop by 1.8 percent to 2.2 percent, versus prior forecast for flat sales. The company expects Q4 adjusted earnings of $2.54 to $2.64 per share, versus analysts' estimates of $2.90 per share. The company's board also rejected the formation of a real-estate investment trust. The company said that the formation of a REIT would not create 'enough value.' Macy's shares fell 9 percent to $42.77 in pre-market trading.