Macy's warns on profits as Q3 net income tumbles
US retailer Macy's issued a profit warning on Thursday morning after witnessing its first decline in same-store sales for two years.
Net income for the three months ended 2 November fell to $2.0m, a marked drop when measured against the $62.0m recorded a year earlier. However, excluding one-time items, Macy’s earned $0.07 per share, better than the breakeven result expected by analysts.
Net sales fell to $5.17bn from $5.40bn, missing expectations for $5.32bn.
Sales online and at Macy's owned and licensed stores open for at least a year were down 3.5%, which was worse than the 1.0% expected and snapping a streak of seven consecutive quarters of same-store sales gains.
Chief executive Jeff Gennette said the sales decline was "steeper" than even the company itself had anticipated, citing a warmer autumn, lower than expected spending by international tourists and "weaker than anticipated performance in lower-tier malls".
As far as the full-year was concerned, Macy's now expects same-store sales to be down by 1-1.5%. Previously, it was expecting a flat reading to 1% gain. Net sales appeared set to drop 2.5% to 2%, while annual adjusted earnings per share were forecast to fall within a range of $2.57 to $2.77 each - down from a prior range of $2.85 to $3.05.
As of 1355 GMT, Macy's shares were down 5.79% in pre-market trading at $14.15 each.