Department-store operator Macy’s (NYSE:M) disclosed a weaker-than-expected 0.7% bump in second-quarter profits on Wednesday and dimmed its full-year earnings outlook amid softer sales projections.
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Wall Street punished the iconic retailer for the latest results, driving its shares down as much as 4.6% ahead of the opening bell.
Macy’s said it earned $281 million, or 72 cents a share last quarter, compared with a profit of $279 million, or 67 cents a share, a year earlier. Analysts had called for more robust EPS of 78 cents.
Revenue contracted 0.8% to $6.08 billion, trailing the Street’s view of $6.26 billion. Same-store sales also fell 0.8%, missing forecasts from analysts for a jump of 2.3%.
“Our performance in the period, in part, reflects consumers` continuing uncertainty about spending on discretionary items in the current economic environment,” CEO Terry Lundgren said in a statement.
Looking ahead, Macy’s downgraded its EPS guidance to $3.80 to $3.90, which is below its prior view of $3.90 to $3.95 and below estimates from analysts for $3.94. Same-store sales are seen rising 2.5% to 4% in the first half, compared.
For the full year, management expects same-store sales to increase 2% to 2.9%, compared with the company’s prior target of about 3.5%.
Lundgren said customers are “responding favorably” to recent markdowns following a cool spring and the retailer has “seen a strengthening of the sales trend in key elements” in ready-to-wear clothing for women, an area it has struggled in lately.
Also, Lundgren said Macy’s executives are “encouraged by our early read on the back-to-school season” and the retailer is “capturing incremental sales opportunities” in childrenswear, activewear and Impulse apparel.
Macy’s said it spent about $446.7 million to buy back 9.2 million shares during the second quarter, leaving the company with about $2.2 billion remaining in repurchase authority.
Shares of Cincinnati-based Macy’s fell 2.99% to $47.05 in premarket trading Wednesday morning, setting them up to shrink their 2013 rally of about 24.3%.