Macy'sM posted a second-quarter profit and beat Wall Street expectations even as the department store chain's results were weighed down by costs for consolidations and store closings.
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The Cincinnati-based chain said Wednesday it is boosting its profit outlook as it benefits from the cost-cutting.
Macy's earned $7 million, or 2 cents a share, in the quarter ended Aug. 1. That compares with $73 million, or 17 cents a share, in the same period last year.
But excluding restructuring charges of $34 million, or 18 cents a share, related to division consolidations and initiatives to localize merchandising to regional markets, the company earned 20 cents a share. That well exceeded the 15 cents projects by analysts surveyed by Reuters.
Revenues were $5.16 billion, down almost 10% from a year ago, slightly below analysts' forecasts of $5.18 billion. Macy's same-store sales, or sales at stores opened at least a year, were down 9.5%. Same-store sales are considered a key indicator of a retailer's health.
"Our unified organizational structure is settling in and working well," said Terry Lundgren, Macy's chairman, president and chief executive, in a statement. "It has allowed us to streamline decision-making and build closer a relationship with our key vendor resources."
Department stores are facing big challenges as shoppers — worried about job security, tight credit and slumping home prices — keep their focus on basics like food. While there are signs of stabilization, business remains weak.
Macy's has been shoring up profits with aggressive cost-cutting. It announced in February that it will eliminate 7,000 jobs, almost 4% of its work force; it also cut capital spending, reduced its contributions to its employees' retirement funds and slashed its dividends to preserve cash.
The moves follow Macy's announcement in January — on the heels of the worst holiday season in decades — that it would close 11 stores, affecting 960 employees.
Last year, it began rolling out a program to localize merchandising to regional markets.
Macy's said Wednesday that it expects same-stores sales to be down in the range of 5% to 6%. That would result in a same-store sales decline of between 7% and 7.5% for the full year. That's within the company's internal guidance of a drop between 6% and 8%.
The company said it now expects earnings per share for the full year to be anywhere from 70 cents to 80 cents a share, excluding restructuring charges. That's an increase from the earlier projected range of 40 cents to 55 cents. Analysts surveyed by Reuters expect profit of 79 cents a share.