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Macy’s Full-Year Profit, Sales Forecasts Miss Estimates

Posted by Reuters  |  February 24,2015  |  09:18 AM
Macy's store

REUTERS/Brendan McDermid

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9:19 AM

02/24/15

(Reuters) – Department store chain Macy’s Inc reported a weaker-than-expected rise in sales in the holiday quarter and forecast full-year profit and revenue that missed analysts expectations as the company invests in new lower-priced and international stores.

Macy’s, which caters mainly to higher-income customers and owns the high-end Bloomingdale’s chain, is looking to widen its customer base by attracting shoppers hunting for deals and discounts in a highly competitive retail environment.

The company said on Tuesday it would boost spending this year by 6 percent to $1.2 billion. Macy’s plans to build so-called off-price stores that sell items such as seconds, canceled orders and returned goods at lower prices.

While TJX Companies Inc and Ross Stores Inc run only off-price stores, upscale retailer Nordstrom Inc operates such stores under the Nordstrom Rack brand.

Sales under the Rack brand rose 17 percent in the latest quarter, while Nordstrom total sales rose 9 percent.

Macy’s announced a slew of appointments this month aimed at streamlining its online, store and marketing divisions and said it would buy luxury beauty and spa services retailer Bluemercury Inc for $210 million.

Macy’s forecast earnings of $4.70-$4.80 a share for the year ending January 2016, lower than analysts’ average estimate of $4.84, according to Thomson Reuters I/B/E/S.

It expects same-store sales growth to accelerate to about 2 percent this year from the 0.7 percent rise last year. But total sales are expected to grow about 1 percent to $28.39 billion, short of the average analysts’ estimate of $28.63 billion.

Macy’s net income fell to $793 million in the fourth quarter ended Jan. 31, from $811 million a year earlier.

However, earnings rose to $2.26 per share from $2.16 due to a lower share count. Excluding items, profit was $2.44 per share.

Net sales rose 1.8 percent to $9.36 billion.

Analysts on average had expected earnings of $2.40 per share on sales of $9.39 billion, according to Thomson Reuters I/B/E/S.

Macy’s shares were off 0.5 percent at $63.83 in premarket trading.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Maju Samuel and Savio D’Souza)

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