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BUSINESS
Macy's reports loss on weak sales, restructuring
CINCINNATI -- Macy's Inc. said Wednesday that it lost $59 million in the first quarter because of lower sales and the cost of consolidating business units, which should save money starting next year.
Losses totaled 14 cents a share in the three months ended March 31, compared with a profit of $36 million, or 8 cents a share, in the same quarter a year ago, Macy's said. Revenue was $5.75 billion, down from $5.92 billion a year ago.
Macy's booked a $55 million after-tax charge, or 13 cents a share, for the restructuring. Macy's also set aside $14 million after tax, or 3 cents per share, for a potential settlement of a wage and hour class-action lawsuit in California.
Without the unusual items, earnings from continuing operations were 2 cents a share, Macy's said.
Analysts polled by Thomson Financial forecast a loss of 2 cents a share on revenue of $5.6 billion. Analyst forecasts typically exclude one-time charges and gains.
Macy's shares were up $1.31, or 5.44 percent, to $25.37 in midday trading Wednesday. The shares have traded between $20.94 and $45.50 the past year.
"Given the very difficult economic environment, our company performed relatively well compared to the competition in the first quarter," said Terry J. Lundgren, chairman, president and chief executive.
Macy's has struggled with disappointing sales and resistance from shoppers in some markets where the Macy's name replaced local favorites after it bought department store operator May Co. in 2005.
Sales at stores opened at least a year -- considered a key indicator of a retailer's success -- were down 2.6 percent in the quarter.
Chief Financial Officer Karen Hoguet told analysts in a conference call Wednesday that despite the decline same-store sales, Macy's was pleased with its performance relative to its competitors.
"This gives us comfort that the strategies we are executing are right, and that customers are responding well to our offerings," Hoguet said.
She said sales in the quarter were stronger in the Northeast and in Texas, while performance was weaker on the West Coast and in Florida.
Feminine apparel continued to be the toughest category in the quarter, while men's categories did better and the home category was mixed, Hoguet said.
She said highly desirable premium brands and Macy's private brands are selling well.
Macy's announced in February that it would combine three regional divisions and cut about 2,300 management jobs to better tailor individual stores to customer needs.
Hoguet said the division consolidation was completed in the first quarter, and Macy's is now moving on to training in the new organizations.
Macy's reaffirmed its earlier guidance for same-store sales for the year to be in the range of down 1 percent to up 1.5 percent, with earnings per share of $1.85 to $2.15, excluding one-time division consolidation costs. The company expects to book about $60 million in consolidation costs in the final three quarters.
