Macy's sales fall as middle-class shoppers stay cautious
By Phil Wahba
(Reuters) - Macy's Inc (M.N: Quote) reported an unexpected decline in sales on Wednesday and blamed hesitation by consumers to spend on non-essentials, leading to deeper markdowns and a disappointing profit.
Shares of Macy's, which also operates the luxury chain Bloomingdale's, were down 3.3 percent at $46.89 in midday trading, leading other retail stocks lower.
The retailer said comparable sales and overall sales slid 0.8 percent in the second quarter. Analysts expected comparable sales to rise 2.3 percent, according to Thomson Reuters I/B/E/S.
It also lowered full-year profit targets, saying the "continuing uncertainty" people have about spending on items they do not need in a tough economy is weighing on results. In May, the retailer warned its budget-conscious shoppers were being cautious again.
On a conference call with Wall Street analysts, Chief Financial Officer Karen Hoguet said shoppers are directing more of their spending to their cars, housing and home improvement. Adding to the pain was a drop in traffic to malls.
Some Macy's pain was self inflicted. The company did not offer enough of the low-price merchandise shoppers wanted, Hoguet said.
The results come a week after a group of large U.S. retailers posted disappointing sales for July and had to resort to discounts to spur buying. Kohl's Corp (KSS.N: Quote) and Wal-Mart Stores Inc (WMT.N: Quote) will report on Thursday, while big chains such as J.C. Penney Co Inc (JCP.N: Quote), Target Corp (TGT.N: Quote) and Sears Holdings Corp (SHLD.O: Quote) report next week.
"The sales environment is tough. The low-to-mid end customer is still struggling," said Edward Jones analyst Brian Yarbrough. Continued...