Macy's offers cautious annual profit outlook

AP News
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Posted: Feb 24, 2015 1:10 PM
Macy's offers cautious annual profit outlook

NEW YORK (AP) — Macy's delivered a disappointing full-year profit outlook Tuesday as the department store chain reported sluggish sales for the holiday quarter.

The department store chain, which also operates the upscale Bloomingdale's chain, has been a standout among its peers throughout the economic recovery and has reaped the benefits of its strategy to tailor merchandise to local markets.

But the company is seeing slower sales growth as it grapples with intense competition online and shoppers' focus away from clothing and more toward gadgets and other categories.

Another problem? The labor dispute at the West Coast ports, which Macy's estimates will delay 12 percent of its merchandise receipts for the current quarter and take a bite out of sales.

Earlier this month, Macy's announced a series of executive changes that should help it move more quickly on growth strategies. It also announced it signed an agreement to buy Bluemercury.com, an upscale beauty retailer. It also is exploring an off-price strategy for its Macy's brand.

It is also testing new services like same-day delivery of products purchased at Macys.com and Bloomingdales.com.

"This new phase we have entered has the opportunity to take our company to a whole new level of success," Karen Hoguet, Macy's chief financial officer, told analysts on a call following the earnings results.

In the fourth quarter, Macy's earned $793 million, or $2.26 per share. That compares with earnings of $811 million, or $2.16 per share, last year, when the company had more shares outstanding.

Adjusted results totaled $2.44 per share, excluding charges for store closings and a previously announced merchandising and marketing restructuring, among other items.

That topped the average analyst forecast of $2.39 per share.

Macy's, which has corporate offices in Cincinnati and New York, also saw revenue climb nearly 2 percent to $9.36 billion, which fell short of analyst expectations for $9.4 billion.

Revenue at stores open at least a year, including licensed businesses like beauty departments, climbed 2.5 percent in the quarter. Excluding licensed businesses, sales for that measure rose 2 percent.

These figures are seen as a key indicator of a retailer's health because they exclude the potentially distorting impact of recently opened or closed stores.

The department store operator said Tuesday that it expects fiscal 2015 earnings to range between $4.70 and $4.80 per share.

Analysts expect, on average, earnings of $4.83 per share, according to FactSet.

Shares of Macy's fell $2.25 or nearly 4 percent, to $61.92 in afternoon trading. The stock had already fallen about 2 percent so far this year, before markets closed Monday.