NEW YORK (AP) — Macy's Inc. reported a disappointing profit for its second quarter and cut its outlook for the year on Wednesday. The department store chain blamed shoppers' reluctance to spend for a rare slip in sales.
Its shares fell nearly 5 percent in regular trading. Over the past year, its stock is up almost 27 percent.
The second-quarter weakness raises worries about consumer spending, an important part of the economy, and how other merchants fared during the spring and early summer.
Macy's, the first of the major retailers to report second-quarter results, has been a standout among its peers throughout the economic recovery. It's a barometer of spending among middle- to upper-income shoppers.
Wal-Mart Stores Inc., Kohl's Corp. and Nordstrom Inc. are among the major retailers scheduled to report later this week.
Like other retailers, the Cincinnati-based operator of Macy's and Bloomingdale's is grappling with a yo-yo economic recovery that's making people careful about their purchases heading into the heart of the key back-to-school selling period.
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 top of that, Americans are still trying to digest higher payroll taxes that went into effect Jan. 1.
"We believe that much of our weakness is due to the health of the consumer and to the fact that consumers seem to be choosing to make purchases in non-department store categories such as cars, housing and home improvement," Karen Hoguet, Macy's chief financial officer, said during a conference call with investors.
Hoguet also said that Macy's was also partly to blame for the sales shortfall as well. The chain didn't provide ample offerings of low-priced merchandise. To lure shoppers back in the store, Macy's said it is stepping up marketing but declined to offer details.
Chris Donnelly, London-based global retail managing director at Accenture, said that in this still tough economic environment, shoppers are shifting their spending around since they can't afford to buy all the product categories at one time. The nature of back-to-school shopping adds even more pressure to retailers.
Unlike Christmas, "there is no artificial deadline," he said. "There's no reason you have to buy the new pair of jeans on the first day of school."
For the three months that ended Aug. 3, Macy's said it earned $281 million, or 72 cents per share. That's short of the 78 cents per share analysts expected. It was the first time Macy's profit missed expectations since 2007. A year ago, the company earned $279 million, or 67 cents per share.