NEW YORK (AP) — Macy's Inc. reported a disappointing profit for its second quarter and cut its outlook for the year on Wednesday, with the department store operator blaming shoppers' reluctance to spend for a slip in sales.
Its shares fell 3.4 percent to $46.85 in premarket trading. Over the past year, its stock is up almost 27 percent.
Macy's, which operates its namesake stores and Bloomingdales, is seen as a barometer of spending among middle- to upper-income shoppers.
Like other retailers, the Cincinnati-based company is grappling with a yo-yo economic recovery that's making people more careful about their purchases heading into the heart of the key back-to-school selling period.
"To see Macy's miss by a wide margin is troublesome, speaking volumes about the health, or lack thereof, of middle America," wrote Brian Sozzi, chief equities strategist for Belus Capital Advisors.
For the period ended Aug. 3, Macy's says it earned $281 million, or 72 cents per share. That's short of the 78 cents per share analysts expected. A year ago, the company earned $279 million, or 67 cents per share.
Revenue slipped to $6.07 billion, also short of the $6.26 billion analysts expected, according to FactSet.
Revenue at stores open a year, a key metric because it strips out the impact of newly opened and closed locations, slid 0.8 percent.
Macy's now expects sales at stores open at least a year to climb between 2 percent and 2.9 percent, down from its previous guidance of a 3.5 percent increase.
While jobs are easier to get and the turnaround in the housing market is showing promise, the improvements haven't been enough to get most Americans to spend more. Most are juggling tepid wage gains with higher costs of living.
On Wednesday, Macy's nevertheless said it was encouraged by its early read on the back-to-school season heading into the third quarter. But other retailers such as teen clothing sellers American Eagle Outfitters Inc. and Aeropostale Inc. have cited lots of discounting and warned of a slow start to the period.
Macy's also said that it has been marking down prices after a cool spring and that shoppers are responding positively.
Macy's also lowered its earnings forecast to $3.80 to $3.90 per share, down from the previous outlook of $3.90 to $3.95 per share.
The disappointing results from Macy's don't bode well for J.C. Penney Co., which reports next week, Sozzi said.
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