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In the News

Macy's posts profit and says sales improving

Macy's posts profit and says sales improvingReutersPublished: Wednesday, August 15, 2007

ATLANTA (Reuters) - Retailer Macy's Inc. posted a better-than-expected quarterly profit on Wednesday and said sales trends at newer stores were improving, sending its shares up as much as 4 percent.

Shares fell to their lowest level since November 2005 in early trading after the company cut its full-year outlook. But the Cincinnati company, formerly called Federated Department Stores, got credit from analysts for boosting promotions in a bid to spur sales at newer Macy's stores.

"I think results can only go up," said Faith Hope Consolo, chairman of the retail leasing and sales division at Prudential Douglas Elliman Real Estate. "By this time next month, things will be looking much better."

Earnings at Macy's fell to $74 million, or 16 cents a share, in the second quarter ended August 4, from $317 million, or 57 cents a share, a year earlier.

Excluding costs tied to the 2005 acquisition of May Department Stores, earnings in the second quarter came to 29 cents a share, better than the 26 cents analysts expected, according to Reuters Estimates. Last month, Macy's cut its second-quarter profit outlook, citing weaker-than-expected sales at stores open one full fiscal year.

"While the second quarter was below our initial expectations, we did see improving sales trends through the quarter in former May Company stores and in home-related merchandise categories," Macy's Chief Executive Terry Lundgren said in a statement.

Sales at former May stores had been a drag on results for much of the year.

Despite concerns about consumer spending, "we do believe that we have the ammunition to perform better than we have year to date," Chief Financial Officer Karen Hoguet said during a conference call on Wednesday.

Prudential's Consolo credited the aggressive promotions, but also noted better service levels in some Macy's stores she had visited.

"With their sales and promotions, Macy's can offer a good product at a very affordable price," Consolo said.

Macy's forecast per-share profit of 5 cents to 10 cents for the third quarter and $1.70 to $1.80 a share for the fourth quarter, excluding merger costs.

Analysts expected per-share profit of 19 cents for the third quarter, $1.83 for the fourth period, according to Reuters Estimates.

It now expects full-year profit of $2.15 to $2.30 a share. That's down from a May forecast of $2.45 to $2.60 per diluted share from continuing operations, excluding merger costs. The average Reuters estimate was $2.35 for the year.

Macy's shares were up 75 cents, or 2.36 percent, to $32.48 in morning New York Stock Exchange trading. So far this year, the stock has fallen 16 percent.

(See http://blogs.reuters.com/category/themes/shop-talk/ for "Shop Talk" -- Reuters' retail and consumer blog)

(Reporting by Karen Jacobs)

© Reuters 2007

 

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