The department store operator Macy’s said Wednesday that its third-quarter loss shrunk as inventory controls and a move to adjust merchandise by region paid off. The company also raised its profit and sales outlook for the year.
The profit outlook, however, was not as high as analysts expected, and shares fell $1.57, or 8.1 percent, to $17.86.
Some of the company’s best-performing districts were the original test areas for the locally tailored merchandise. Other bright spots were its growing Internet business and rebounding sales performance at Bloomingdale’s, a sign that affluent shoppers were slowly going back to buying.
The company said that it lost $35 million, or 8 cents a share, in the quarter ended Oct. 31, compared with $44 million, or 10 cents a share, in the period a year ago.
Excluding costs to consolidate several divisions and introduce the localization plan, Macy’s lost 3 cents a share.
Revenue fell almost 4 percent, to $5.28 billion. Sales at stores open at least a year were down 7.5 percent in the quarter. That barometer is considered a crucial indicator of a retailer’s health because it excludes the effects of expansion.
Analysts surveyed by Thomson Reuters forecast a loss of 7 cents on revenue of $5.25 billion.
Stores like Macy’s have faced big challenges as shoppers — worried about job security and tight credit — keep their focus on basics like food. But chains are starting to see consumers spend a bit more on shoes and home accessories. Still, overall business remains weak.
Macy’s has been shoring up its results with aggressive cost-cutting, including job cuts, lower capital spending and reduced contributions to employees’ retirement funds.
The localization drive seeks to concentrate Macy’s top talent in local markets and stay on top of trends by grouping Macy’s stores into 69 districts, with 10 to 12 stores each. Twenty of the districts — in the Midwest, Upper Midwest and Pacific Northwest — were created as pilots in spring 2008. The initiative spread to the remaining 49 districts in the second quarter.
Online sales, including macys.com and bloomingdales.com, rose 21.1 percent in the third quarter and 15.6 percent for the year to date.
Macy’s said it expected sales at stores open at least a year to be down 1 percent to 2 percent in the critical fourth quarter, which translates to a decrease of 2.1 percent to 2.6 percent in the second half of 2009. That was better than the company’s previous forecast of a decrease of 5 percent to 6 percent for that half.
The profit outlook, however, was not as high as analysts expected, and shares fell $1.57, or 8.1 percent, to $17.86.
Some of the company’s best-performing districts were the original test areas for the locally tailored merchandise. Other bright spots were its growing Internet business and rebounding sales performance at Bloomingdale’s, a sign that affluent shoppers were slowly going back to buying.
The company said that it lost $35 million, or 8 cents a share, in the quarter ended Oct. 31, compared with $44 million, or 10 cents a share, in the period a year ago.
Excluding costs to consolidate several divisions and introduce the localization plan, Macy’s lost 3 cents a share.
Revenue fell almost 4 percent, to $5.28 billion. Sales at stores open at least a year were down 7.5 percent in the quarter. That barometer is considered a crucial indicator of a retailer’s health because it excludes the effects of expansion.
Analysts surveyed by Thomson Reuters forecast a loss of 7 cents on revenue of $5.25 billion.
Stores like Macy’s have faced big challenges as shoppers — worried about job security and tight credit — keep their focus on basics like food. But chains are starting to see consumers spend a bit more on shoes and home accessories. Still, overall business remains weak.
Macy’s has been shoring up its results with aggressive cost-cutting, including job cuts, lower capital spending and reduced contributions to employees’ retirement funds.
The localization drive seeks to concentrate Macy’s top talent in local markets and stay on top of trends by grouping Macy’s stores into 69 districts, with 10 to 12 stores each. Twenty of the districts — in the Midwest, Upper Midwest and Pacific Northwest — were created as pilots in spring 2008. The initiative spread to the remaining 49 districts in the second quarter.
Online sales, including macys.com and bloomingdales.com, rose 21.1 percent in the third quarter and 15.6 percent for the year to date.
Macy’s said it expected sales at stores open at least a year to be down 1 percent to 2 percent in the critical fourth quarter, which translates to a decrease of 2.1 percent to 2.6 percent in the second half of 2009. That was better than the company’s previous forecast of a decrease of 5 percent to 6 percent for that half.
POSTED BY:
SHILPI KUMARI
PGDM III SEM
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