Macy's Shares Plunge After 3Q Revenue Drop

Dow Jones Newswires

Macy's Inc (NYSE:M) slashed its full-year sales and profit forecasts and reported a surprise drop in quarterly same-store sales as customers cut back on expenditure and a strong dollar discourages tourists from spending at its stores.

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Macy's also said it would not form a real estate investment trust at this time, but was considering redeveloping some flagship properties through joint ventures or other deals.

Shares of the operator of Macy's and Bloomingdale's stores fell more than 9 percent in premarket trading on Wednesday.

The company said it expected same-store sales to fall by 1.8-2.2 percent in the year ending January. Macy's had earlier forecast flat comparable sales.

Same-store sales fell 3.6 percent for the third straight quarter. Analysts on average had expected 0.2 percent growth, according to research firm Consensus Metrix.

In contrast, J.C. Penney Co Inc <JCP.N> said earlier on Wednesday its same-store sales rose 6.4 percent in the third quarter, the strongest growth in over nine years.

Activist investor Starboard Value had urged Macy's in July to consider spinning off its real estate assets, valuing them at about $21 billion.

Macy's cut its full-year adjusted profit forecast to $4.20-$4.30 per share from $4.70-$4.80.

The net income attributable to shareholders fell 45.6 percent to $118 million, or 36 cents per share, in the quarter ended Oct. 31, partly due to an impairment charge related to planned closure of some stores.

Net sales fell 5.2 percent to $5.87 billion, the third straight quarter of decline, missing the average analyst estimate of $6.09 billion, according to Thomson Reuters I/B/E/S.

Excluding items, Macy's earned 56 cents per share, beating analysts' expectations of 54 cents.

The company also said it had signed an agreement with Ray-Ban maker Luxottica Group <LUX.MI> to open licensed LensCrafters shops in as many as 500 Macy's stores over the next three years.

Macy's shares were trading at $42.60 before the bell.

(Reporting by Sruthi Ramakrishnan in Bengaluru, additional reporting by Ramkumar Iyer; Editing by Kirti Pandey)

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