Reuters

(Reuters)

Macy’s 1Q Hit by Port Slowdown, Winter Weather

Features Dow Jones Newswires

Macy's Inc. reported weaker-than-expected sales and profit in the first quarter, as some of the retailer's merchandise shipments were snarled in clogged West Coast ports and severe winter weather damped sales.

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The company also cited lower levels of spending by international tourists visiting flagship Macy's and Bloomingdale's stores in cities like New York and Chicago.

Macy's Chief Executive Terry J. Lundgren noted that many of the issues the retailer faced in the quarter were short-term problems that have now passed. Mr. Lundgren expressed optimism about Macy's new business initiatives. The company backed its 2015 outlook.

Separately, Macy's said it has boosted its dividend by 15% and added $1.5 billion to its share buyback program.

Macy's Inc. has been ratcheting up spending on everything from new store concepts to international expansion in an effort to reverse a four-year slowdown in sales growth.

The company has said it plans to increase capital expenditures by $100 million this year to develop new store formats, like a bargain version of its namesake department stores, to further integrate its stores and online operations, and to expand both its Macy's and Bloomingdale's nameplates outside the U.S.

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Earlier this month, Macy's said it would open four discount stores, called Macy's Backstage, in the fall in and around New York City.

Macy's has long stood out as a bright spot in the sluggish retail landscape where shoppers are taking fewer trips to the mall and making more purchases online. But as the U.S. economy has rebounded, Macy's hasn't as much. This is in part because its offering of apparel and accessories had a hard time competing with new spending priorities for American consumers, who were more interested in cars, health care and electronics.

In the latest quarter, sales excluding newly opened or closed stores fell 0.7% in the period. When licensed departments are included, sales were down 0.1%.

Overall for the quarter ended May 2, profit fell to $193 million, or 56 cents a share, from $224 million, or 60 a share, a year earlier.

Net sales edged down slightly to $6.23 billion.

Analysts polled by Thomson Reuters had expected 62 cents a share in earnings and $6.32 billion in revenue.

Gross margin improved slightly to 39% from 38.9% a year earlier.

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