Document View

The Cincinnati-based retailer, the first of several big department-store chains to report earnings this week, posted a third-quarter loss of $35 million on a 3.9% sales drop.

(c) 2009 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.

Macy's Inc. raised its fourth-quarter sales outlook Wednesday, sounding an optimistic note on holiday demand. But the department-store chain's profit forecast disappointed investors, suggesting that while shoppers are slowly returning, they are keeping a tight grip on spending.

The Cincinnati-based retailer, the first of several big department-store chains to report earnings this week, posted a third-quarter loss of $35 million on a 3.9% sales drop.

"There's a sense of momentum at Macy's Inc. that positions us to gain market share despite the environment," Macy's Chief Financial Officer Karen Hoguet said in a conference call. She warned, however, "There are more uncertainties than usual."

The retailer raised its full-year earnings forecast excluding restructuring costs to a range of between $1.01 and $1.06 a share.

Analysts were projecting full-year earnings of $1.11 a share, according to Thomson Reuters. For the current quarter, the company projected earnings of between $1 and $1.05 a share, below analysts' estimates of $1.17 per share.

The lower-than-expected outlook for the quarter and year sent the company's shares down 8% to $17.86 in 4 p.m. trading on the New York Stock Exchange.

Department stores "are still in a challenging place," said Maggie Taylor, an analyst at Moody's Investors Service. "So we're in wait-and-see mode for Christmas." Nordstrom Inc. and Kohl's Corp. are due to release quarterly results on Thursday.

Macy's said it lost $35 million, or 8 cents a share, in the three months ended Oct. 31, compared with a loss of $45 million, a year ago. Excluding restructuring charges, the company lost 3 cents a share, compared with analysts' forecasts of a loss of 7 cents a share, according to Thomson Reuters.

The company praised its localization initiative -- which tailors stores' merchandise to regional tastes -- for boosting sales at stores where the initiative has been implemented. "We are gaining confidence that this unique strategy . . . will give us a real competitive advantage," Ms. Hoguet said.

Sales in the quarter fell 3.9% to $5.3 billion. Sales at stores open for at least a year fell 3.9%. The company said its online sales rose 21%.

---

Karen Talley contributed to this article.

Credit: By Rachel Dodes