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Macy's forecast vexes investors
It raised its full-year profit outlook and reported a smaller quarterly loss, but shares fell $1.57.
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NEW YORK - Macy's Incorporated's third-quarter loss shrunk as tight inventory controls and a move to localize merchandise at its department stores by region paid off. The company also raised its full-year profit and sales outlook.
The profit outlook, including a tempered forecast for the fourth quarter, didn't go as high as analysts expected, and shares fell $1.57, or more than 8 percent, to close at $17.86.
In a conference call with investors Wednesday morning, Karen Hoguet, chief financial officer at Macy's, said that while she's encouraged by improving sales, she warned there's still plenty of uncertainty heading into the holiday season.
"We are just going to have to wait and see," Hoguet said.
Some of Macy's best-performing districts were the original test beds for the locally tailored merchandise. Other bright spots were its growing Internet business and rebounding sales performance at Bloomingdale's, another sign that affluent shoppers are slowly going back to shopping after a sudden retreat last fall.
The Cincinnati-based department store operator said Wednesday that it lost $35 million, or 8 cents per share, in the quarter ended Oct. 31. That compares with $44 million, or 10 cents per share, in the year-ago period.
Excluding costs to consolidate several divisions and roll out the localization plan, Macy's lost 3 cents per share.
Macy's reported revenue fell almost 4 percent to $5.28 billion. Sales at stores open at least a year were down 3.6 percent in the quarter. That barometer is considered a key indicator of a retailer's health because it excludes the effects of expansion.
Analysts surveyed by Thomson Reuters forecast a loss of 7 cents on revenue of $5.25 billion.
Macy's has been shoring up its results with aggressive cost-cutting, including job cuts, lower capital spending and reduced contributions to employees' retirement funds.
Overall, Hoguet told investors that sales in the Midwest are the strongest, but Macy's saw improved performance in every region.
Macy's said it now expects sales at stores open at least a year to be down 1 percent to 2 percent in the critical fourth quarter, which translates to a decrease of 2.1 percent to 2.6 percent in the second half of 2009.
Macy's raised its full-year guidance to $1.01 to $1.06 per share. That's up from previous guidance issued in August of 70 cents to 80 cents per share. The forecast excludes restructuring charges. Wall Street analysts forecast $1.11 per share.
Macy's shares have almost doubled since the beginning of the year. It has been trading near its 52-week high of $20.84.
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