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U.S. department store chain's shares are down 71 percent from a year ago
By Cotten Timberlake
Bloomberg News
Published on Saturday, Oct 11, 2008
Macy's Inc. Chief Executive Officer Terry Lundgren said consumer spending won't recover until the second half of next year and views stability in U.S. jobs as the key to improving sales.
''My clear hope is that we'll see a turnaround in 2009,'' Lundgren, 56, said Friday. ''It is looking more like the back half of 2009.''
Macy's will counter that spending slump with ''aggressive'' fourth-quarter promotions and will control costs by buying less advertising this period, hiring holiday workers as sales warrant and delaying store openings, Lundgren said. The company is having ''zero'' problems paying for its inventory, which is down from a year ago, he said.
''The most important issue for us is jobs,'' Lundgren said. ''That's what has to stabilize. If you lose your job, that affects everything.''
Macy's stock fell $1.54 to $9.92 on Friday. Shares are down 71 percent from a year ago and down 62 percent in 2008. That compares with a 30 percent decline in the 81-member Standard & Poor's 500 Consumer Discretionary Index.
Macy's said Friday that profit this year will fall more than it forecast on lower than previously expected sales. It joined J.C. Penney Co., Kohl's Corp. and Nordstrom Inc. in projecting declines as the global credit crisis deepens and shoppers spend less. Department stores have been hit especially hard because people aren't spending much on anything other than necessities.
The second-largest U.S. department-store chain is trying to boost sales by identifying hot-selling items like cashmere goods, women's boots and Tommy Hilfiger clothes, and then increasing the inventory of those products to meet demand, the Please see Macy's, D8
Continued from Page D1
CEO said.
The company continues to gain sales from its competitors, and Macy's recent sales performance was twice as good as theirs, Lundgren said. ''We do not need the customer to spend more money for us to be successful,'' he said. ''All we need them to do is spend more money at Macy's and Bloomingdale's.''
Sales at stores open a year may fall 3 percent to 6 percent for the second half of the year, compared with an Aug. 13 projection of a 1 percent decline at most, the Cincinnati-based retailer said.
In the first eight months of the year, those sales declined 3.2 percent, Macy's said. For that period, Nordstrom reported a 6.8 percent drop, Penney posted a 6.6 percent decline, and Kohl's a 5.6 percent retreat.
Earnings per share may fall to $1.30 to $1.50 for the year ending Jan. 31, compared with its August 13 projection of $1.70 to $1.85, Macy's said. Sixteen analysts surveyed by Bloomberg News estimate profit of $1.74.
Macy's Inc. Chief Executive Officer Terry Lundgren said consumer spending won't recover until the second half of next year and views stability in U.S. jobs as the key to improving sales.
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