CINCINNATI (AP) — With a hint at what may be in store for shoppers this holiday season, Macy's cut its profit outlook and CEO Terry Lundgren said markdowns are likely as a convergence of factors lead to a high inventory of goods for retailers.
Macy's third-quarter sales fell 3.6 percent at established locations.
Warm weather, a strong dollar and the shifting habits of American shoppers have all weighed on sales for retailers, including Macy's, and investors are growing increasingly concerned about the effect that that will have during the most critical shopping period of the year.
Shares of Macy's Inc. plunged more than 10 percent at the opening bell Wednesday.
"We're going to take markdowns, I mean, great for consumers," said Lundgren during an interview on CNBC. "Consumers are going to have a field day because we're going to have lots of values out there."
Warm weather has depressed sales for goods like coats, gloves and boots at the same time that the strong dollar has cut into spending by international visitors in New York and other tourist destinations.
For the quarter ended Oct. 31, Macy's Inc. earned $118 million, or 36 cents per share. Excluding one-time costs, earnings were 56 cents per share, which was two cents more than analysts expected, according to Zacks Investment Research. The one-time costs were mostly related to the company's previously announced plans to close between 35 and 40 stores early next year.
Over time, the company said Wednesday it expects it will continue to reduce its store base.
Total revenue for the quarter fell to $5.87 billion in the period, and was short of $6.15 billion Wall Street forecast.
The Cincinnati company now expects full-year earnings in the range of $4.20 to $4.30 per share, down from the previous guidance of $4.70 to $4.80 per share.
That is short of the $4.40 that Wall Street was expecting.
Shares fell $4.87 to $42.15 in early trading, meaning that the company's stock has fallen 36 percent this year.
The report, which kicked off the earnings season for retailers, dragged the entire sector downward, with shares of almost every retailer in decline Wednesday.
