No recovery 'anytime soon' for Macy's

Macy's Inc., the second-largest U.S. department-store company, said quarterly profit declined and full-year earnings may fall more than it previously thought, as consumers hold down spending.

Profit may reach $1.85 a share in 2008, excluding some costs, after sales at stores open at least a year fall more than expected, Macy's said Wednesday. The retailer had forecast as much as $2.15 a share three months ago.

Macy's is struggling with declining sales as shoppers reduce purchases because of higher fuel prices and concerns about job security and eroding housing values.

"Their expectations of a consumer bounce in the remainder of the year have really gone away," said David Heupel, a Minneapolis-based portfolio manager with Thrivent Financial for Lutherans, which manages $60 billion in assets. Macy's "doesn't see a recovery anytime soon," Heupel added.

Second-quarter net income dropped 1.4 percent, to $73 million, or 17 cents a share, in the three months ended Aug. 2, from $74 million, or 16 cents a share, a year earlier, the Cincinnati-based retailer said. Revenue fell 3 percent, to $5.72 billion, from $5.89 billion.

Macy's stock gained 39 cents Wednesday, or 1.9 percent, to close at $20.66, after falling as much as 4.5 percent earlier in the day. The shares have shed 20 percent this year.

Macy's same-store sales declined 2.1 percent in the quarter, which wasn't as bad as J.C. Penney's 4.3 percent drop or the 6 percent retreat for Nordstrom's.

Excluding costs to consolidate regional divisions, Macy's earned 29 cents a share. On that basis, 16 analysts surveyed by Bloomberg had estimated a result of 19 cents a share on average.

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