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Department store chain responds to cautious shoppers

Macy’s profit up 11 percent; sales miss forecasts

By Anne D’Innocenzio
Associated Press

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Macy’s Inc.’s fourth-quarter profit rose 11 percent, but the department store chain suffered a sales shortfall because a string of winter storms chilled business in January.

The results released Tuesday came after a solid but fiercely competitive holiday shopping season for the Cincinnati-based operator of Macy’s and Bloomingdale’s stores. The chain has been a standout among its peers throughout the economic recovery as it has benefited from its moves to tailor merchandise to local markets.

But like other retailers, severe winter storms have caused Macy’s to close stores and kept shoppers at home. At one time during January, 244 Macy’s and Bloomingdale’s stores, or about 30 percent of the company’s total, were shut down because of the weather. Business remained sluggish until Valentine’s Day, said Macy’s Chairman, President and CEO Terry Lundgren in a statement.

But the company was still sticking with its annual profit and sales forecast.

“Once warm spring weather arrives and our full assortment of fresh spring merchandise is in place, we believe customers will return to a more normalized pattern of shopping,” he said.

Like other retailers, Macy’s is also dealing with cautious shoppers and trying to respond to shoppers’ shift toward buying and researching on their computers and mobile devices. Last month, the company announced it was cutting, 2,500 jobs as part of a reorganization to sustain profitability. While Macy’s is cutting jobs, it is also adding positions related to online shopping. That will leave its workforce level at about 175,000.

The department store chain said it earned $811 million, or $2.16 per share, in the three months that ended Feb. 1. That compares with $730 million, or $1.83 per share, a year earlier.

Excluding items related to closing some stores and other cost-reduction strategies, the company earned $2.31 per share in the latest quarter.

Revenue slipped 1.6 percent to $9.2 billion.

Analysts were expecting $2.17 per share on revenue of $9.28 billion, according to research firm FactSet.

Revenue at stores open at least a year rose 1.4 percent, below the 2.5 percent increase that Wall Street analysts expected.

For November and December combined, the traditional holiday shopping season, revenue at stores open at least a year rose 4.3 percent. The figure includes sales from departments licensed to third parties.

Macy’s reiterated that revenue at stores opened at least a year for the current year is expected to be up in the range of 2.5 percent to 3 percent. It also stuck with its earnings forecast of $4.40 to $4.50 per share for the year.

Analysts had expected $4.45 per share for the current fiscal year, according to FactSet.


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