Macy’s profit sinks
The company cut its annual sales forecast for a key revenue measure and shares tumbled five per cent in early trading on Wednesday.
Separately, the company, which also operates upscale Bloomingdale’s, said it plans to begin selling online in China late this year through Alibaba Group’s Tmall Global, which connects retailers with Chinese consumers.
Macy’s, which has headquarters in Cincinnati and New York, has been a standout in retail throughout the economic recovery.
Yet it is facing new challenges in driving sales growth as the behavior of consumers shift. And the strong dollar has crimped the spending of tourists visiting from overseas in places like Macy’s flagship store in New York because their money isn’t going as far as it used to.
A West Coast port labour dispute added to those problems.
Macy’s said on Wednesday that planned markdowns in many departments were delayed to clear merchandise that arrived late.
Macy’s is aggressively seeking new growth initiatives. It bought Blue Mercury, a Washington, D.C. cosmetics and skincare retailer, earlier this year. It’s getting ready to open the first four outlet stores called Macy’s Backstage this fall in and around New York City.
Macy’s announcement regarding China underscores how it’s also looking overseas for growth. By making Macy’s more accessible to China, the company said that it can deepen its relationship with domestic and international customers in the US.
Still, the latest second quarter results illustrate the challenges before Macy’s.
Macy’s earned $US217 million, or 64 cents per share, in the quarter ended August 1. That compares with $US292 million, or 80 cents per share, in the year ago period.
Revenue fell 2.6 per cent to $US6.1 billion from $US6.26 billion.
Analysts had expected 76 cents per share on sales of $US6.22 billion, according to FactSet.
Shares fell $US3.48 to $US64.05.
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