Bad to Worse
Stock spotlight
SPOTLIGHT | Sale rumors lift Macy's
September 15, 2007
Macy's Inc. shares rose 3.2 percent amid renewed speculation that the second-largest U.S. department-store chain will be acquired. Friday's talk was that Vornado Realty Trust and Edward Lampert's ESL Investments Inc. hedge fund would buy it for $43 a share. Macy's shares rose 93 cents to $30.18.
Stock spotlight
August 30, 2007
Macy's shares jumped 6.2 percent, or $1.84 to $31.69 Wednesday. On Tuesday, Cincinnati-based Macy's raised $350 million by offering 5.5-year notes that paid 73 basis points more than five-year debt issued in March. On Wednesday, it announced that Ticketmaster would open 38 more outlets in its stores.
Macy's cuts outlook after profit falls 77 percent for the quarter
RETAILING | Cost of integrating May stores blamed, shares dip 2 percent
August 16, 2007
BY SANDRA GUY sguy@suntimes.com
Macy's suffered a 77 percent drop in profits and a sales decline in the second quarter, and cut its full-year sales and earnings outlook.
Yet executives said strong sales on the Web and shoppers' response to renewed coupon promotions and a new Martha Stewart collection show promise in a weak economy.
Macy's shares dipped 63 cents, or about 2 percent, to $31.10.
Profits were hurt by higher-than-expected costs of integrating more than 400 former May Department Stores, including the Marshall Field's chain. Macy's bought the May Department Stores for $11 billion in August 2005.
But cost cuts helped shrink selling, general and administrative expenses.
Sales at the former Marshall Field's and other May stores continue to disappoint, but are closing the gap in performance with long-time Macy's stores, Chief Financial Officer Karen Hoguet said in a conference call with analysts.
The gap should close next year, but the converted Marshall Field's stores might take longer to gain acceptance, Hoguet said. Long-time Macy's stores were hurt by missteps in color and style in ready-to-wear clothing in the spring. Hoguet said Macy's executives believe they have the right fashions for fall, such as denim, wide-leg pants and novelty jackets and coats.
Executives saw good news in early sales of Martha Stewart's exclusive line of home fashions for Macy's: Martha's goods are already listed on 35 percent of bridal registries. The line of bedding, bath, cookwear and decorating kits will debut in all Macy's stores on Sept. 10 -- one day after the first anniversary of Macy's going nationwide -- though it already is displayed on the first floor of the State Street flagship store in Chicago.
Macy's is working to increase the number of exclusive and limited-distribution merchandise it sells. It will sell 19 collections by Chicago-based fashion designers at the State Street store, starting Oct. 9.
For the quarter ended Aug. 4, Macy's overall net income declined to $74 million, or 16 cents a share, from $317 million, or 57 cents per share, a year ago. Excluding May Department Stores' takeover costs of $60 million, or 13 cents per share, the company earned 29 cents per share.
Last month, it cut its forecast to 20 to 30 cents for the quarter, from its earlier forecast of 35 to 45 cents.
Sales slipped 1.7 percent to $5.89 billion. Macy's had initially expected sales of $6.1 billion to $6.2 billion in the period. Same-store sales declined 2.6 percent, short of Macy's forecast of an increase of 1.5 to 2.5 percent.
Analysts had forecast profits of 26 cents per share on revenue of $5.88 billion.
Macy's reduced its third-quarter profit outlook to 5 to 10 cents per share.
It expects earnings for the full year, without the merger costs, of $2.15 to $2.30 per share.
Macy's posts sharply lower 2Q profit
August 15, 2007
CINCINNATI -- Macy's Inc. said Wednesday its second-quarter profit fell by 77 percent, weighed down by its takeover of a rival, and warned that it would miss Wall Street expectations for the third quarter and the year.
Net income declined to $74 million, or 16 cents per share, from $317 million, or 57 cents per share, a year ago for the quarter ended Aug. 4. Excluding May Department Stores takeover costs of $60 million, or 13 cents per share, the company earned 29 cents per share in the latest period, compared with 33 cents in the 2006 second quarter.
» Click to enlarge image
Macy's second-quarter profit fell by 77 percent.
(AP)
Sales slipped about 2 percent to $5.89 billion from nearly $6 billion last year.
Analysts surveyed by Thomson Financial, who typically exclude one time charges like integration costs, had forecast profits of 26 cents per share on revenue of $5.88 billion. Last month, Macy's cut its third quarter profit outlook to 20 to 30 cents a share from 35 to 45 cents.
Macy's projected that third-quarter earnings, excluding merger costs, will now be 5 to 10 cents per share, with earnings for the full year, without the merger costs, of $2.15 to $2.30 per share. Analysts have projected 19 cents a share for the third quarter and $2.37 per share for the year.
Macy's stock fell below its 52-week low Wednesday, at $31.10, or down 63 cents. Shares have traded as high as $46.70 in the past year.
''While the second quarter was below our initial expectations, we did see improving sales trends through the quarter in former May Company stores and in home-related merchandise categories,'' said Terry J. Lundgren, Macy's chairman, president and chief executive. ''We are optimistic that our business can and will improve in the second half of the year, despite what appears to be a more challenging economic environment.''
Lundgren told shareholders at their annual meeting in May that disappointing sales results were partly due to strategic changes made too quickly at the former May Department Stores. Lundgren orchestrated Macy's $11 billion acquisition of May in 2005.
Macy's changed its name from Federated Department Stores this year after converting most of its former May stores -- including popular regional names such as Marshall Field's, Foley's and Filene's -- into Macy's in its push to make Macy's a national department store brand.
The turnaround of the former May stores hasn't progressed as well as expected, and the retailer also has been facing challenges such as a weakening home market, which has depressed its home furnishings sales.
For the first half of the year, Macy's sales totaled $11.81 billion, down nearly 1 percent from total sales of $11.93 billion in the first 26 weeks of 2006. For the first half, net income slid to $110 million, or 24 cents a share, from $265 million, 48 cents a share.
Macy's operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's. AP
New Macy's distribution center will employ 130 fewer
August 14, 2007
BY SANDRA GUY sguy@suntimes.com
Macy's will build a new distribution center in southwest suburban Minooka to replace its existing distribution center at 4000 W. Diversey Ave., which will be shuttered in the spring.
The new 850,000-square-foot center will employ 210 -- 150 full-time and 60 part-time -- or 130 fewer workers than at the 1.55-million-square-foot center on Diversey. The new center, about 50 miles southwest of Chicago, will open in early spring 2008.
Macy's cut more than 200 jobs at the existing center earlier this year by outsourcing furniture delivery, reducing some interior-design services, and converting other systems. The center at one time served 44 Marshall Field's and Dayton Hudson stores.
Macy's spokesman Jim Sluzewski said the retailer will try to put displaced employees in other jobs. Employees who cannot find new jobs or who choose not to accept other positions will be eligible for severance pay and outplacement help, he said. Workers were given the news Monday morning.
Macy's will move a furniture clearance store at the Diversey site to leased space in a retail center near Fox Valley Mall in Aurora.
The new furniture clearance store will employ the same number -- 10 -- as the existing store. The new store is set to open this year.
The existing distribution center is housed in a six-story building that was developed in stages starting in the 1930s, and formerly run by Marshall Field's. The Minooka building will be one story. Macy's bought the Field's chain in August 2005, and turned Field's stores into Macy's in September 2006.
Macy's will sell the land on Diversey.
Tom Cole, Macy's vice chairman, said in a statement the new distribution center will be more efficient than the existing one and was necessary to accommodate Macy's growing online business.
"The Minooka site was selected following an exhaustive search of potential locations in Chicago and the surrounding region," Cole said. "We are proud to have elected to keep this facility in the state of Illinois."
Macy's employs 6,500 people in the greater Chicago area aside from the distribution center, including 2,400 in the city of Chicago.
A tale of two Julys in world of shops
ECONOMY | Retailers suffer, discounters enjoy sales gains
August 10, 2007
BY SANDRA GUY sguy@suntimes.com
Wary shoppers chose discount stores and off-mall department stores for back-to-school fashions in July, raising gloomy prospects for retailers heading into the fall season.
Macy's, owner of the former Marshall Field's department-store chain, said Thursday its same-store sales declined 1.4 percent in July, better than analysts' forecast of a 2.1 percent drop. Same-store sales, or sales at stores open at least a year, are considered a key sign of a retailer's health.
Total sales, which include new stores such as the Macy's in Bolingbrook, dipped 0.2 percent, to $1.6 billion, in the four weeks that ended Aug. 4.
» Click to enlarge image
Macy's State Street store in Chicago. The back-to-school shopping season had a disappointing start in July as consumers rattled by a weakening housing market and other financial pressures stayed away from stores and malls.
(AP/Brian Kersey, file)
Bon-Ton, owner of the Carson Pirie Scott & Co. chain, reported same-store sales in July dropped 7.6 percent at all of its stores, but the Carson's division by itself had a 1.5 percent sales decline. The Elder-Beerman chain's same-store sales plummeted 17.3 percent. Total sales declined 7.6 percent, to $194.3 million.
Bon-Ton's numbers, while disappointing, look even worse because they're being compared with last year's liquidation sales following Bon-Ton's takeover of the Carson's division of Saks, said Tony Buccina, vice chairman and president of merchandising.
Specialty stores also were hard hit, with steep declines in same-store sales at Aeropostale (12 percent), Abercrombie & Fitch (4 percent), American Eagle Outfitters (6 percent), Gap (7 percent), Pacific Sunwear (4.6 percent) and Wet Seal (7.2 percent).
Department and teen-specialty stores were hit by shoppers' concerns about high gasoline prices and a slumping housing market that's causing a credit squeeze, as well as a shift in the retail calendar that moved some back-to-school sales into August.
Those that reported strong same-store sales gains were: Target (6.1 percent), J.C. Penney (10.8 percent), and Wal-Mart (1.9 percent on strong grocery sales, at the high end of expectations), as well as the perennially strong high-end retailer Nordstrom (9.4 percent).
Analysts held out hope that shoppers are waiting until the last minute for discounts.
SPOTLIGHT | Sale rumors lift Macy's
September 15, 2007
Macy's Inc. shares rose 3.2 percent amid renewed speculation that the second-largest U.S. department-store chain will be acquired. Friday's talk was that Vornado Realty Trust and Edward Lampert's ESL Investments Inc. hedge fund would buy it for $43 a share. Macy's shares rose 93 cents to $30.18.
Stock spotlight
August 30, 2007
Macy's shares jumped 6.2 percent, or $1.84 to $31.69 Wednesday. On Tuesday, Cincinnati-based Macy's raised $350 million by offering 5.5-year notes that paid 73 basis points more than five-year debt issued in March. On Wednesday, it announced that Ticketmaster would open 38 more outlets in its stores.
Macy's cuts outlook after profit falls 77 percent for the quarter
RETAILING | Cost of integrating May stores blamed, shares dip 2 percent
August 16, 2007
BY SANDRA GUY sguy@suntimes.com
Macy's suffered a 77 percent drop in profits and a sales decline in the second quarter, and cut its full-year sales and earnings outlook.
Yet executives said strong sales on the Web and shoppers' response to renewed coupon promotions and a new Martha Stewart collection show promise in a weak economy.
Macy's shares dipped 63 cents, or about 2 percent, to $31.10.
Profits were hurt by higher-than-expected costs of integrating more than 400 former May Department Stores, including the Marshall Field's chain. Macy's bought the May Department Stores for $11 billion in August 2005.
But cost cuts helped shrink selling, general and administrative expenses.
Sales at the former Marshall Field's and other May stores continue to disappoint, but are closing the gap in performance with long-time Macy's stores, Chief Financial Officer Karen Hoguet said in a conference call with analysts.
The gap should close next year, but the converted Marshall Field's stores might take longer to gain acceptance, Hoguet said. Long-time Macy's stores were hurt by missteps in color and style in ready-to-wear clothing in the spring. Hoguet said Macy's executives believe they have the right fashions for fall, such as denim, wide-leg pants and novelty jackets and coats.
Executives saw good news in early sales of Martha Stewart's exclusive line of home fashions for Macy's: Martha's goods are already listed on 35 percent of bridal registries. The line of bedding, bath, cookwear and decorating kits will debut in all Macy's stores on Sept. 10 -- one day after the first anniversary of Macy's going nationwide -- though it already is displayed on the first floor of the State Street flagship store in Chicago.
Macy's is working to increase the number of exclusive and limited-distribution merchandise it sells. It will sell 19 collections by Chicago-based fashion designers at the State Street store, starting Oct. 9.
For the quarter ended Aug. 4, Macy's overall net income declined to $74 million, or 16 cents a share, from $317 million, or 57 cents per share, a year ago. Excluding May Department Stores' takeover costs of $60 million, or 13 cents per share, the company earned 29 cents per share.
Last month, it cut its forecast to 20 to 30 cents for the quarter, from its earlier forecast of 35 to 45 cents.
Sales slipped 1.7 percent to $5.89 billion. Macy's had initially expected sales of $6.1 billion to $6.2 billion in the period. Same-store sales declined 2.6 percent, short of Macy's forecast of an increase of 1.5 to 2.5 percent.
Analysts had forecast profits of 26 cents per share on revenue of $5.88 billion.
Macy's reduced its third-quarter profit outlook to 5 to 10 cents per share.
It expects earnings for the full year, without the merger costs, of $2.15 to $2.30 per share.
Macy's posts sharply lower 2Q profit
August 15, 2007
CINCINNATI -- Macy's Inc. said Wednesday its second-quarter profit fell by 77 percent, weighed down by its takeover of a rival, and warned that it would miss Wall Street expectations for the third quarter and the year.
Net income declined to $74 million, or 16 cents per share, from $317 million, or 57 cents per share, a year ago for the quarter ended Aug. 4. Excluding May Department Stores takeover costs of $60 million, or 13 cents per share, the company earned 29 cents per share in the latest period, compared with 33 cents in the 2006 second quarter.
» Click to enlarge image
Macy's second-quarter profit fell by 77 percent.
(AP)
Sales slipped about 2 percent to $5.89 billion from nearly $6 billion last year.
Analysts surveyed by Thomson Financial, who typically exclude one time charges like integration costs, had forecast profits of 26 cents per share on revenue of $5.88 billion. Last month, Macy's cut its third quarter profit outlook to 20 to 30 cents a share from 35 to 45 cents.
Macy's projected that third-quarter earnings, excluding merger costs, will now be 5 to 10 cents per share, with earnings for the full year, without the merger costs, of $2.15 to $2.30 per share. Analysts have projected 19 cents a share for the third quarter and $2.37 per share for the year.
Macy's stock fell below its 52-week low Wednesday, at $31.10, or down 63 cents. Shares have traded as high as $46.70 in the past year.
''While the second quarter was below our initial expectations, we did see improving sales trends through the quarter in former May Company stores and in home-related merchandise categories,'' said Terry J. Lundgren, Macy's chairman, president and chief executive. ''We are optimistic that our business can and will improve in the second half of the year, despite what appears to be a more challenging economic environment.''
Lundgren told shareholders at their annual meeting in May that disappointing sales results were partly due to strategic changes made too quickly at the former May Department Stores. Lundgren orchestrated Macy's $11 billion acquisition of May in 2005.
Macy's changed its name from Federated Department Stores this year after converting most of its former May stores -- including popular regional names such as Marshall Field's, Foley's and Filene's -- into Macy's in its push to make Macy's a national department store brand.
The turnaround of the former May stores hasn't progressed as well as expected, and the retailer also has been facing challenges such as a weakening home market, which has depressed its home furnishings sales.
For the first half of the year, Macy's sales totaled $11.81 billion, down nearly 1 percent from total sales of $11.93 billion in the first 26 weeks of 2006. For the first half, net income slid to $110 million, or 24 cents a share, from $265 million, 48 cents a share.
Macy's operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's. AP
New Macy's distribution center will employ 130 fewer
August 14, 2007
BY SANDRA GUY sguy@suntimes.com
Macy's will build a new distribution center in southwest suburban Minooka to replace its existing distribution center at 4000 W. Diversey Ave., which will be shuttered in the spring.
The new 850,000-square-foot center will employ 210 -- 150 full-time and 60 part-time -- or 130 fewer workers than at the 1.55-million-square-foot center on Diversey. The new center, about 50 miles southwest of Chicago, will open in early spring 2008.
Macy's cut more than 200 jobs at the existing center earlier this year by outsourcing furniture delivery, reducing some interior-design services, and converting other systems. The center at one time served 44 Marshall Field's and Dayton Hudson stores.
Macy's spokesman Jim Sluzewski said the retailer will try to put displaced employees in other jobs. Employees who cannot find new jobs or who choose not to accept other positions will be eligible for severance pay and outplacement help, he said. Workers were given the news Monday morning.
Macy's will move a furniture clearance store at the Diversey site to leased space in a retail center near Fox Valley Mall in Aurora.
The new furniture clearance store will employ the same number -- 10 -- as the existing store. The new store is set to open this year.
The existing distribution center is housed in a six-story building that was developed in stages starting in the 1930s, and formerly run by Marshall Field's. The Minooka building will be one story. Macy's bought the Field's chain in August 2005, and turned Field's stores into Macy's in September 2006.
Macy's will sell the land on Diversey.
Tom Cole, Macy's vice chairman, said in a statement the new distribution center will be more efficient than the existing one and was necessary to accommodate Macy's growing online business.
"The Minooka site was selected following an exhaustive search of potential locations in Chicago and the surrounding region," Cole said. "We are proud to have elected to keep this facility in the state of Illinois."
Macy's employs 6,500 people in the greater Chicago area aside from the distribution center, including 2,400 in the city of Chicago.
A tale of two Julys in world of shops
ECONOMY | Retailers suffer, discounters enjoy sales gains
August 10, 2007
BY SANDRA GUY sguy@suntimes.com
Wary shoppers chose discount stores and off-mall department stores for back-to-school fashions in July, raising gloomy prospects for retailers heading into the fall season.
Macy's, owner of the former Marshall Field's department-store chain, said Thursday its same-store sales declined 1.4 percent in July, better than analysts' forecast of a 2.1 percent drop. Same-store sales, or sales at stores open at least a year, are considered a key sign of a retailer's health.
Total sales, which include new stores such as the Macy's in Bolingbrook, dipped 0.2 percent, to $1.6 billion, in the four weeks that ended Aug. 4.
» Click to enlarge image
Macy's State Street store in Chicago. The back-to-school shopping season had a disappointing start in July as consumers rattled by a weakening housing market and other financial pressures stayed away from stores and malls.
(AP/Brian Kersey, file)
Bon-Ton, owner of the Carson Pirie Scott & Co. chain, reported same-store sales in July dropped 7.6 percent at all of its stores, but the Carson's division by itself had a 1.5 percent sales decline. The Elder-Beerman chain's same-store sales plummeted 17.3 percent. Total sales declined 7.6 percent, to $194.3 million.
Bon-Ton's numbers, while disappointing, look even worse because they're being compared with last year's liquidation sales following Bon-Ton's takeover of the Carson's division of Saks, said Tony Buccina, vice chairman and president of merchandising.
Specialty stores also were hard hit, with steep declines in same-store sales at Aeropostale (12 percent), Abercrombie & Fitch (4 percent), American Eagle Outfitters (6 percent), Gap (7 percent), Pacific Sunwear (4.6 percent) and Wet Seal (7.2 percent).
Department and teen-specialty stores were hit by shoppers' concerns about high gasoline prices and a slumping housing market that's causing a credit squeeze, as well as a shift in the retail calendar that moved some back-to-school sales into August.
Those that reported strong same-store sales gains were: Target (6.1 percent), J.C. Penney (10.8 percent), and Wal-Mart (1.9 percent on strong grocery sales, at the high end of expectations), as well as the perennially strong high-end retailer Nordstrom (9.4 percent).
Analysts held out hope that shoppers are waiting until the last minute for discounts.
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