Macy’s swings to profit; sales forecast sinks shares

Macy’s Inc., the owner of its namesake chain and Bloomingdale’s, said Wednesday that it had a fiscal third-quarter profit after limiting expenses. The retailer cut its fourth-quarter sales forecast, sending the shares down the most in more than five years.

Macy’s reversed a year-earlier loss as costs to integrate the May Department Stores Co. locations it acquired shrank to $17 million from $145 million.

Consumers face higher gasoline, housing and food costs heading into the holiday shopping season. Chief Executive Terry Lundgren called the current market “a challenging economic environment.”

“They are preparing for a fairly disappointing holiday season,” said David Heupel, a Minneapolis-based fund manager with Thrivent Financial for Lutherans. “Their commentary was pretty dour.”

The retailer maintained the profit outlook for the last three months of the year.

Net income for the third quarter through Nov. 3 was $33 million, or 8 cents a share, the company said. It had a loss of $3 million, or 1 cent a share, a year earlier.

Excluding merger-related costs, Macy’s had a profit of 10 cents a share. On that basis, analysts predicted 7 cents, according to a Bloomberg survey. Revenue rose 0.3% to $5.91 billion, trailing the $5.92-billion estimate from analysts.

Shares of Macy’s fell $2.18, or 7.1%, to $28.47.

The retailer reduced its revenue forecast for the fourth quarter by $100 million to $8.7 billion to $8.9 billion. It reiterated its per-share profit estimate of $1.70 to $1.80, excluding some expenses.

Macy’s also cut its forecast for same-store sales, a key measure of retail health, predicting a drop of 2% to an increase of 1% in the fourth quarter. It had projected comparable sales to be unchanged to up 2%.