Skip to main content

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.

Click here to read more.

This ad will auto-close in 10 seconds