While Macy’s Inc. reported a slight increase in profit for Q2 as a result of lower costs and expenses, both sales and earnings were lower than expected for the period, missing analysts’ expectations.
Terry Lundgren, chairman, president and chief executive officer of Macy’s said, “We had planned our second quarter sales with a lower increase than the first quarter because of a shift in a major promotional event. Even so, second quarter sales performance was softer than anticipated, and we are disappointed with the results.”
Macy’s second-quarter net income was $281 million, up from $279 million in the year-ago period.
Net sales for the quarter, however, were down by 0.8% to $6.07 billion from $6.12 billion in the prior-year quarter. Analysts estimated revenue at $6.26 billion for the quarter. Comparable sales for the second quarter declined 0.8% from the prior-year period.
Gross margin for the quarter edged down to 41.8% from 41.9% in last year’s second quarter. Operating margin declined to 8.8% from 9.1% in the same period last year.
Selling, general and administrative expenses for the quarter were $2.00 billion, down from $2.01 billion in the prior-year period.
Looking ahead, Macy’s lowered its outlook for fiscal 2013 earnings and comparable sales growth. The company’s shares are down 3 percent in pre-market trades.
Macy’s noted that its performance in the second quarter partly reflected consumers’ continuing uncertainty about spending on discretionary items in the current economic environment.
For the second half of 2013, Macy’s forecast comparable sales to increase in a range of 2.5% to 4%.
Lundgren said, “Going into the third quarter, we also are encouraged by our early read on the back-to-school season. We accelerated receipts of fresh inventory at Macy’s so we could be fully prepared for an early start to the academic year in certain regions of the country.”
For fiscal 2013, Macy’s lowered its outlook for earnings and comparable sales growth. The company now forecasts earnings per share of $3.80 to $3.90 per share and comparable sales increase of 2% to 2.9%.
Earlier, the company had projected same-store sales growth for the year of about 3.5% and earnings per share in a range of $3.90 to $3.95.