Macy’s (M) reported a worse-than-expected increase in same-store sales on Thursday, citing stagnant economic growth and lower spending by tourists, but still backed its fiscal year forecast.
The department-store chain, which is headquartered in Cincinnati but has its flagship store in New York, posted a 1.2% rise in same-store sales – a key growth metric for retailers that measures sales at stores open longer than a year.
That is below the 1.9% increase predicted by analysts on average in a Thomson Reuters poll.
Total sales during the five weeks ended July 2 climbed 0.8% to $2.4 billion up from $2.39 billion, while online sales, which include macys.com and bloomingdales.com, were up 31.8%.
Macy’s CEO Terry Lundgren said the weaker-than-expected results reflected “a macroeconomic environment that is stagnant at best, and lower spending by tourists in cities such as New York City.”
Renovations at Macy’s flagship store in New York’s Herald Square disrupted business more than expected during the June sales period. However, Lundgren said the store is on track to open next month what it is calling “the largest women’s shoe department in the world.”
Despite the slowdown, sales trends near Father’s Day and demand for new merchandise, such as its Brazil-inspired clothes, helped improve sales. Macy’s said the company continues to believe in its key strategies for the “ongoing growth” of its business.
“Given our healthy cash flow, we expect to buy back at least $1 billion in shares this year,” Lundgren said.
The retailer, which hosts a massive Thanksgiving Day parade in New York in November and funds the city’s fireworks display during Fourth of July, backed its fiscal 2012 guidance first provided in May.
Same-store sales are expected to grow by 3.7%, with earnings per share in the range of $3.25 to $3.30 a share, Macy’s said. That is below the consensus of $3.37 a share.