Macy's posts higher profit, raises earnings forecast
(Reuters) - Macy's Inc (M.N: Quote) reported a higher-than-expected second-quarter profit on Wednesday, helped by cost controls and strong sales in July, and the department store chain raised its full-year profit forecast.
Macy's shares were up 3.2 percent to $38.20 in premarket trading.
As previously reported, second-quarter sales rose 3 percent to $6.12 billion. Sales at stores open at least a year, a key industry metric known as same-store sales, also rose 3 percent.
Same-store sales were below the retailer's forecast for a 3.5 percent jump. Chief Executive Terry Lundgren blamed "a soft economy," less spending by foreign tourists, and disruptions caused by the ongoing $400 million makeover of Macy's iconic Manhattan flagship store.
But the chain's sales improved in July, beating expectations, and Lundgren said he was confident Macy's could win market share heading toward the holiday season.
His confidence comes as rival J.C. Penney Co Inc (JCP.N: Quote) continues to work on a massive overhaul, which has confused shoppers and led sales at that chain to plunge.
Macy's reported net income of $279 million, or 67 cents a share, for the quarter that ended July 28, up 15.8 percent from $241 million, or 55 cents a share, a year earlier. Analysts' average forecast was 64 cents a share, according to Thomson Reuters I/B/E/S.
Macy's, which also owns the upscale Bloomingdale's chain, has handily outperformed competitors J.C. Penney and Kohl's Corp (KSS.N: Quote), whose shoppers have been quicker to pull back on spending.
Macy's raised its full-year profit outlook by 5 cents per share and now expects to earn $3.30 to $3.35 per share. It left its forecast for same-store sales unchanged at a rise of 3.7 percent.
The retailer said it would interrupt the remodeling of its flagship Herald Square store during the holiday season so as not to impede shopping.
(Reporting by Phil Wahba in New York; Editing by Maureen Bavdek and John Wallace)
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