NEW YORK – Macy's cut its profit outlook after a sales shortfall in its latest quarter, suggesting that shoppers can expect another discount-laden holiday shopping season.
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Still, the department store's third-quarter earnings beat Wall Street's estimate, and shares rose.
Macy's, a standout among its peers throughout the economic recovery, is the first of the major retailers to report third-quarter results. How much shoppers spent during the period, which runs from August through October, hints at how much they'll be buying during the upcoming holiday shopping season.
While gas prices are low and unemployment has dropped, retailers are still contending with shoppers' stagnant wages. And consumers are spending money on health care, gadgets and cars instead of fashion.
Several chains, including J.C. Penney and Kohl's, have cautioned that fall sales were weaker than they expected. Those companies plus Wal-Mart and Target are reporting results this week and next.
"We have found that we are not immune to the weaker-than-anticipated consumer spending," Karen Hoguet, Macy's chief financial officer, told analysts during a conference call Wednesday.
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But Hoguet said Macy's remains optimistic about what it can control, from pushing trendy merchandise to offering new shopping apps.
"It may be an understatement to say that we have our accelerator pedal pushed to the floor this holiday season," Hoguet said.
Macy's, which operates upscale Bloomingdale's, has benefited from its focus on tailoring merchandise to local markets. It's also trying to create a more seamless experience for shoppers who are going back and forth from stores to websites
This fall, it's testing a same-day delivery service for products purchased online in several major markets.
The company has also rolled out a service that allows shoppers to buy online and then pick up the merchandise from in stores.
For the period that ended on Nov. 1, Macy's earned $217 million, or 61 cents per share. That's up 23 percent from $177 million, or 47 cents per share, a year earlier.
Analysts surveyed by FactSet predicted earnings of 50 cents per share.
Revenue dipped 1 percent, to $6.2 billion from $6.28 billion. Wall Street predicted $6.34 billion.
Revenue at stores open at least a year, including business from licensed areas like cosmetics, fell 0.7 percent. Not counting licensed revenue, the measure fell 1.4 percent.
Macy's strongest merchandise categories included handbags, fragrance, active wear and fashions for "millennials," those born between the early 1980s and the late 1990s. Sales were weak in its home business, women's shoes and women's clothing outside of millennials.
Macy's Inc., which has corporate offices in New York and Cincinnati, said that it now expects 2014 earnings between $4.25 and $4.35 per share. Its prior outlook was for $4.40 to $4.50 per share. Analysts expect full-year earnings of $4.41 per share.
Its shares rose $2.91, or 5 percent, to $61.50 afternoon trading Wednesday.
AP Business Writer Michelle Chapman contributed to this report.
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