Macy's Sales Stumble In Second Quarter, Annual Sales Projections Cut

By Sam Lewis

America’s second-largest department store chain says shoppers are reluctant to spend

Macy’s — which also operates Bloomingdales stores — reported disappointment in profits during the second quarter, falling short of the mark set by many retail analysts, and has cut its projections for annual sales. Macy’s, often viewed as a barometer for middle-to-upper-income shoppers, places some of the blame of its shortcomings upon the American consumer and current economic conditions. “Our performance in the period, in part, reflects consumers’ continuing uncertainty about spending on discretionary items in the current economic environment,” CEO Terry Lundgren said in a statement.

During the second quarter, Macy’s reported earnings of $281 million, or 72 cents per share, versus $279 million, or 67 cents per share, in the same time frame a year ago. Despite the $2 million in growth, Macy’s fell well short of the 78 cents per share predicted by analysts polled by Thomas Reuters. The retailer also decreased its earnings forecast for 2013. Starting at $3.90 to $3.95 per share, expectations have dropped to $3.80 to $3.90 per share.

Another figure putting Macy’s below expectations is revenue. Macy’s revenue dipped to $6.07 billion, below the $6.26 billion predicted by analysts. Furthermore, revenue for stores open at least a year — eliminating variables of newly opened and closed stores — slid eight tenths of a percent. Macy’s expects comparable sales in the second half of 2013 to increase 2.5 to 4 percent, down from original predictions of 3.5 percent growth.

Despite the disappointment in its second quarter numbers and slow starts reported by other clothing retailers, Macy’s is encouraged by its early numbers in the back-to-school season and heading into quarter three. “We accelerated receipts of fresh inventory at Macy's so we could be fully prepared for an early start to the academic year in certain regions of the country. As a result, we are capturing incremental sales opportunities in childrenswear, activewear, and impulse apparel (for the older Millennial customer),” Lundgren said.

The substandard second quarter reported by Macy’s is not a favorable omen for JC Penney — which has been riddled by controversy — as it is due to report a quarterly statement next week.