NEW YORK (AP) — Macy's Inc. on Wednesday reported a 4 percent profit increase in its fiscal second quarter as business rebounded from slow sales earlier in the year.
But the department store chain cut its full-year outlook for a key sales measure, saying it couldn't make up the sales shortfall from the first quarter, when winter storms kept shoppers at home.
Shares of Macy's tumbled more than 5 percent, or $3.16, to $56.60 in premarket trading.
Macy's, a standout among its peers throughout the economic recovery, is the first of the major retailers to report second-quarter results, which should provide insight into shoppers' mindset heading into the critical final months of the year. Wal-Mart Stores Inc. and J.C. Penney Co. are set to report their results Thursday.
Like many retailers catering to the middle class, Macy's is facing economic challenges. While the job market is improving and the housing market is rebounding, the gains are not strong enough to sustain big shopping sprees. That means that many stores like Macy's have had to keep discounting to attract shoppers.
"We are approaching the second-half of 2014 with confident optimism in our business strategies, merchandise assortments and marketing plans, tempered with the reality that many customers still are not feeling comfortable about spending more in an uncertain economic environment," Terry J. Lundgren, Macy's chairman and CEO, said in a statement.
Still, Macy's, which also operates the upscale chain Bloomingdale's, has benefited from its focus on tailoring merchandise to local markets. It's also aiming to create a more seamless experience for shoppers who are going back and forth from stores to websites.
Macy's, which has corporate offices in Cincinnati and New York, said it just completed the rollout of a program that allows shoppers to order online and then pick up at stores in time for the fall and winter holiday season.
Macy's said its second-quarter net income increased to $292 million, or 80 cents per share, from $281 million, or 72 cents per share, in the same quarter a year earlier. The average estimate of analysts surveyed by Zacks Investment Research was for profit of 86 cents per share.
The company said revenue rose 3.3 percent to $6.27 billion from $6.07 billion in the same quarter a year earlier, but missed Wall Street forecasts. Analysts expected $6.29 billion, according to Zacks.
The company said that sales at stores open at least a year rose 3.4 percent. When including departments licensed to third parties, that figure rose 4 percent. But Macy's said that it now expects that measure to increase by 2 percent to 2.5 percent for the year, down from its previous projection of 2.5 percent to 3 percent.
Follow Anne D'Innocenzio at http://www.Twitter.com/adinnocenzio
Original headline: Macy's 2Q profit falls short; sales outlook cut
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