American retailer Macy’s said it had a fiscal third-quarter profit after limiting expenses. The retailer cut its fourth-quarter sales forecast, sending the shares down the most in more than five years.
Macy’s reversed a year-earlier loss as costs to integrate the May Department Stores locations it acquired shrank to $17 million from $145 million, media reports said.
Consumers face higher gasoline, housing and food costs heading into the holiday shopping season. Chief Executive Terry Lundgren called the current market “a challenging economic environment.”
“They are preparing for a fairly disappointing holiday season,” said David Heupel, a Minneapolis-based fund manager with Thrivent Financial for Lutherans. “Their commentary was pretty dour.”
The retailer maintained the profit outlook for the last three months of the year.
The retailer’s net income for the third quarter was $33 million, or 8 cents a share, the company said. It had a loss of $3 million, or 1 cent a share, a year earlier.
Excluding merger-related costs, Macy’s had a profit of 10 cents a share. On that basis, analysts predicted 7 cents, according to a Bloomberg survey. Revenue rose 0.3 per cent to $5.91 billion, trailing the $5.92-billion estimate from analysts.
Shares of Macy’s fell $2.18, or 7.1 per cent, to $28.47.
The retailer reduced its revenue forecast for the fourth quarter by $100 million to $8.7 billion to $8.9 billion. It reiterated its per-share profit estimate of $1.70 to $1.80, excluding some expenses.
Macy’s also cut its forecast for same-store sales, a key measure of retail health, predicting a drop of 2 per cent to an increase of 1per cent in the fourth quarter. It had projected comparable sales to be unchanged to up 2 per cent.
