CINCINNATI _ Macy's (NYSE: M, Stock Forum) first-quarter profit fell 13 per cent as the department store chain faced delayed merchandise shipments from the West Coast port slowdown, severe winter weather and lower spending by international tourists.
The company, which has been a standout in retailing throughout the economic recovery, is the first of the major retailers to report first-quarter results. But the results, announced Wednesday, show the challenges it and other retailers face.
While gas prices are low and unemployment has dropped, stagnant wages have kept a lid on shopping sprees. Moreover, shoppers are spending money on other things, like health care and other services, and stores are also dealing with a shift toward shopping on mobile devices.
Some of the first-quarter problems are temporary. The lingering West Coast port dispute has cost retailers sales when merchandise didn't arrive on time, and unusually cold weather hurt sales of early spring merchandise.
On top of that, Macy's said that its stores in tourist towns such as New York City, Chicago, Las Vegas and San Francisco have been hurt by the decline in foreign tourists, partly because of the strengthening dollar that crimps their purchasing power.
Macy's also cited that its reorganization of its merchandising, planning and marketing area caused some temporary disruption as executives in those areas learned new roles.
But Macy's says it has many reasons to be encouraged. The company is looking to expand to new areas and bolster its services. It announced earlier in the year that it was buying Blue Mercury, a Washington, D.C., based upscale beauty retailer.
It also is getting into the outlet business. Last week, it announced that the first four test stores will open this fall in New York City and the surrounding area. The new outlet stores will be called Macy's Backstage.
``We are excited by the range of initiatives being put in place today,'' said Terry Lundgren, CEO of Macy's in a statement. ``While these new growth initiatives are early in development, we are moving fast to test, learn and bring the most successful ideas to scale quickly.''
But the company's first-quarter results show it has its work cut out for it.
The company reported first-quarter net income of $193 million, or 56 cents per share.
The results missed Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of 61 cents per share.
Macy's posted revenue of $6.23 billion in the period, which also did not meet Street forecasts. Eight analysts surveyed by Zacks expected $6.3 billion.
Macy's expects full-year earnings to be $4.70 to $4.80 per share.
The company's shares fell 78 cents, or a little more than 1 per cent, to $64.55 in premarket trading Wednesday.
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