Earnings Preview: Macy's to report 3rd-qtr results

Macy's 3rd-quarter results, due Wednesday, expected to offer clues on holiday strategies

Associated Press

NEW YORK (AP) -- Macy's Inc. third-quarter results, expected before the market opens Wednesday, should show insight into its customers' willingness to spend heading into the critical holiday season.

WHAT TO WATCH FOR: The department store chain, based in Cincinnati, has been reaping the benefits of its strategy of tailoring merchandise to local markets. But like other clothing merchants, Macy's saw sales slow down over the summer amid new worries about the economy. Consumers also shifted their spending away from impulse purchases toward bigger-ticket items like homes and cars.

Against this background, Macy's reported a disappointing profit for its second quarter and cut its outlook for the year.

Analysts will be watching to see whether Macy's saw the sluggish sales trend continue into late fall, and whether it saw sales suffer because of a partial government shutdown that lasted 16 days.

Wall Street will also be looking for any more details on how Macy's will be competing in what's expected to be a fiercely competitive holiday shopping season. Macy's announced that it will be opening on Thanksgiving evening for the first time to kick off the holiday shopping period, which accounts for 20 percent to 40 percent of retailers' annual revenue.

Macy's, like many other major retailers, no longer reports monthly sales figures. But many of the ones that do, including Costco Wholesale Corp., posted healthy sales gains for October. That showed the partial government shutdown had a limited impact on spending last month.

Analysts will also want to know any updates on how Macy's is benefiting from J.C. Penney's woes. Penney is trying to recover from a botched-up strategy under its former CEO Ron Johnson. Under Mike Ullman, who took back the helm in April, Penney has gone back to more frequent sales events and brought back basic merchandise that Johnson eliminated.

WHY IT MATTERS: Macy's is seen as a barometer of spending among middle- to upper-income shoppers.

WHAT'S EXPECTED: Analysts surveyed by FactSet, on average, expect earnings of 39 cents per share on revenue of $6.19 billion.

LAST YEAR's QUARTER: Macy's, based in Cincinnati, earned 36 cents on revenue of $6.08 billion.

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