Macy’s Trims Sales Outlook After Holidays Didn’t Deliver

Macy’s Inc. issued a slightly more downbeat outlook for sales in the current quarter, a sign that executives might have been too optimistic about their expectations for a solid holiday shopping season.

America’s largest department-store operator said it’s forecasting net sales in the current quarter to be at or slightly below the $7.8 billion to $8 billion executives were expecting as of last month. Analysts surveyed by Bloomberg are anticipating $7.8 billion.

Shares of Macy’s fell 2.6 percent in premarket trading in New York on Monday. The company’s shares fell 16 percent last year, compared with a 12 percent gain for the S&P Midcap 400 Index.

The company maintained its outlook for earnings per share, according to a statement published Monday morning ahead of executives’ presentation at the ICR consumer conference.

Macy’s executives said in December they were expecting a cautious but engaged shopper during the holiday season and raised their forecast for sales — an outlook that looks like it will ultimately prove too rosy. On Monday, the company said Macy’s comparable sales were roughly flat in the nine weeks ended Jan. 4 compared to the year before.

Since he took over nearly a year ago, chief executive Tony Spring has focused on closing down poorly-performing Macy’s stores and investing more resources in the 50 stores that he and his team think have greater potential. Those stores, as well as higher-end Bloomingdale’s and beauty chain Bluemercury, continued to report positive comparable sales in the quarter through Jan. 4, the company said in the statement.

Macy’s said it’s expanding that initiative to an additional 75 Macy’s locations, which Spring said in the statement reflects an “ongoing positive response” to the 50-store strategy. That includes hiring more staff and a focus on selling fewer-but-better items that are particularly popular with department-store shoppers, such as shoes and handbags, among other measures.

The department-store chain is trying to move past an accounting snafu.

In December, Macy’s cut its profit outlook significantly as a result of an investigation into the financial impact of an employee who hid expenses over several years. The company said at the time that most of the impact of the hidden delivery expenses would be recorded in the fourth quarter. Executives have said that the ex-employee acted alone and didn’t hide the expenses for personal gain.

Macy’s executives will present Tuesday at 8am at the ICR conference. The company expects fourth-quarter results in early March.

By Jeannette Neumann

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