Macy's Inc (NYSE:M)reported lower-than-expected quarterly sales as a strong dollar "significantly" hurt spending by foreign tourists in the United States and the company discounted to clear merchandise delayed due to the West Coast ports strikes.
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The company also said it had formed a joint venture with a Hong Kong-based company to explore online retailing in China.
Shares of Macy's, which operates its namesake stores and the upscale Bloomingdale's chain, fell about 2 percent in premarket trading on Wednesday.
The company was also hurt by the removal of a major promotional event.
Macy's same-store sales, including licensed departments, fell 1.5 percent in the second quarter. Analysts on average had expected a 1.3 percent rise, according to research firm Consensus Metrix.
Macy's said it expected same-store sales to remain flat in the year ending January 2016. The company had earlier forecast a rise of about 2 percent.
The retailer said it would start selling its products online in China later this year through Alibaba Group Holdings Ltd's <BABA.N> Tmall Global.
Macy's will own 65 percent stake in the joint venture with Fung Retailing Ltd.
The company's net income fell to $217 million, or 64 cents per share, in the quarter ended Aug. 1 from $292 million, or 80 cents per share, a year earlier.
Net sales fell 2.6 percent to $6.10 billion, the fourth drop in six quarters.
Analysts on average had expected earnings of 76 cents per share and revenue of $6.23 billion, according to Thomson Reuters I/B/E/S.
Macy's shares were trading at $66.35 before the bell.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Kirti Pandey)