Macy’s warns profit margins are shrinking

Already navigating tumbling sales, Macy’s is preparing for even tighter margins.



At the company’s annual investor day, Macy’s CFO Karen Hoguet said that second-quarter gross margins are running about 1 percentage point below what they were last year. The company is slashing costs in a bid to maintain its earnings forecast, which it reaffirmed on Tuesday, according to Bloomberg.



Coinciding with the announcement, the department store chain’s stock fell by 7.5% to $22.08 — marking the worst intraday drop since May 11, the day Macy’s released its results for the first fiscal quarter. The chain is already down 33% this year, the report added.



For the first quarter, Macy's posted a profit of $71 million, or 23 cents a share, down from $116 million, or 37 cents a share, in the year-ago period. Excluding some costs, Macy's adjusted per-share profit fell to 24 cents from 40 cents, below analysts' expectations for 35 cents.



Revenue fell 7.5% to $5.34 billion, versus analysts estimates of $5.47 billion, which Macy’s attributed partly to store closings. Same-store sales fell 4.6%, more than expected. The retailer did not break out its online sales but said its digital platforms showed “continued strong growth” in the quarter.



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