Macy's, Liz Claiborne feel pain of consumer angst
— -- Liz Claiborne, the maker of Juicy Couture apparel and a Macy's supplier, posted a second-quarter loss and said for the second time that its annual profit may trail its projections. Macy's quarterly net income fell 1.4%.
Department-store chains and clothing makers face sales declines as shoppers reduce purchases because of higher gasoline prices and concerns about jobs. Investors fear the U.S. economic slump will persist into next year as rising unemployment and lower property values erode spending.
"The consumer hasn't died yet, but the consumer is really hurting," says Patricia Edwards, a portfolio manager at Wentworth Hauser & Violich in Seattle.
"We're not counting on a robust economic recovery in 2009," Liz Claiborne CEO William McComb said.
Second-quarter net income at Macy's dropped to $73 million, or 17 cents a share, in the three months ended Aug. 2, from $74 million, or 16 cents, a year earlier, the Cincinnati-based retailer said. Revenue dropped 3%, to $5.7 billion, the third-consecutive quarterly decline.
Profit may reach $1.85 a share in 2008, excluding some costs, after sales at stores open at least a year fall more than it had expected, Macy's said.
In May, the retailer had forecast profit of as much as $2.15 a share. Analysts projected average earnings of $1.86.
Macy's "expectations of a consumer bounce in the remainder of the year have really gone away," says David Heupel, a Minneapolis-based portfolio manager. Liz Claiborne is "tied to the hip of a lot of department stores, which has really been a tough space right now."
Excluding costs to consolidate regional divisions, Macy's earned 29 cents a share. It said same-store sales in the second half of the year will be flat to down 1%, and that same-store sales will fall 1% to 1.6% for the year. The retailer previously forecast same-store sales to decline by up to 1%.
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