Macy's cuts full-year forecast, sends shivers through retail
By Nandita Bose and Sruthi Ramakrishnan
(Reuters) - Warm weather, low spending by tourists and a pileup of unsold inventory prompted Macy's Inc (M.N: Quote) to cut its full-year forecast on Wednesday, raising wide concerns about the retail sector's financial health.
Macy's in a quarterly report also said it would not create a real estate investment trust for its stores, disappointing some investors and helping to push down shares 14 percent for the day.
The long spell of warm weather in September and October, which hurt sales of cold weather apparel like coats and jackets, could also affect retailers like Urban Outfitters Inc (URBN.O: Quote), while a drop in spending by tourists is likely to impact Tiffany & Co (TIF.N: Quote) and Hudson's Bay Co (HBC.TO: Quote), which runs chains like Saks Fifth Avenue, said Oliver Chen, analyst with Cowen Equity Research.
Urban Outfitters shares ended down 7.4 percent, Tiffany & Co closed 3.37 percent lower and Michael Kors and Fossil both fell over 4 percent.
Macy's Chief Executive Terry Lundgren said on a conference call he was not happy with the company's performance in the quarter ended Oct. 31.
Sales at stores open at least a year fell 3.6 percent in their third straight quarterly decline. Analysts on average had expected 0.2 percent growth, according to research firm Consensus Metrix.
Macy's said it expected same-store sales to fall by 1.8 percent to 2.2 percent for the year ending in January. Continued...