NEW YORK: Macy’s cut its full-year earnings forecast yesterday after missing estimates for quarterly profit for the first time in at least two years, as it discounted merchandise heavily to clear spring inventory, sending its shares down as much as 18 per cent.
The largest US department store operator, whose flagship building in Manhattan is a major tourist attraction, blamed a bigger-than-expected decline in tourist spending for the shortfall along with weak demand for its own-brand women’s sportswear and for warm weather apparel.
“We had a slow start to the quarter and finished below our expectations,” chief executive Jeff Gennette said.
The Cincinnati, Ohio-based 160-year-old company is pumping money into projects such as remodelling its stores and building up its off-price and online businesses. Macy’s also announced a partnership with fashion resale marketplace thredUP, aimed at helping the chain “reach a new customer and keep them coming back to shop...,” the company said.
Macy’s now expects 2019 adjusted profit to be between $2.85 per share to $3.05 per share, down from a previous forecast of $3.05 to $3.25. For the second quarter ended August 3, net income attributable to Macy’s shareholders slumped 48pc to $86 million, or 28 cents per share.
Net sales fell marginally to $5.55 billion, largely in line with estimates, while sales at its established stores rose 0.3pc.
Still, Macy’s, whose digital business posted its 40th consecutive quarter of double-digit growth, maintained its 2019 sales expectations, and said it entered the fall season with the “right inventory.”