By Aisha Al-Muslim
Macy's Inc. lowered its full-year earnings outlook after missing profit expectations in the latest quarter, even though the retailer reported growth in a key sales metric.
For the current fiscal year, Macy's lowered its earnings guidance by 20 cents. Excluding settlement charges, impairment and other costs, the company now forecasts adjusted earnings per share of $2.85 to $3.05 for the year, compared with its previous estimate of $3.05 to $3.25.
The stock fell 12.5% to $16.94 in premarket trading Wednesday. Shares are down about 54% in the last 12 months.
Despite the expected fall in profit, Macy's reaffirmed its annual sales guidance. The company still expects net sales to be roughly flat from the last fiscal year, with comparable sales to be flat to up 1%.
Sales at stores open at least a year grew 0.2% for the period ended Aug. 3, above the FactSet estimate of flat sales. Including licensed departments, same-store sales rose 0.3%.
Overall, the Cincinnati-based company Wednesday reported net sales for the second quarter fell 0.5% to $5.55 billion, in-line with the consensus forecast.
"We had a slow start to the quarter and finished below our expectations, " Chief Executive Jeff Gennette said in prepared remarks. "Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women's sportswear private brands, slow sell-through of warm-weather apparel and the accelerated decline in international tourism."
The department store operator posted a profit of $86 million, or 28 cents a share, down from $166 million, or 53 cents a share, a year earlier.
Excluding impairment and other costs, adjusted earnings were also 28 cents a share, below the 46 cents a share analysts polled by FactSet were looking for.
On Tuesday, the Trump administration abruptly suspended plans to impose new tariffs on about $156 billion in goods from China until Dec. 15 on items including toys, cellphones and laptop computers that had been set to take effect Sept. 1.
The tariff delay comes as companies expressed concerns about the impact an escalating trade fight would have on businesses and consumers ahead of the holiday shopping season. Retailers' profit margins have already been under pressure as they spend on upgrading their digital capabilities and remodeling their stores.
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