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Macy's (M) - Get Macy's Inc Report should hardly be surprised by its deeper first-quarter loss. The department store has been experiencing weakness well before consumer cutbacks kicked in -- and the recession has only escalated its deterioration.

And even though the otherwise dismal results did manage to beat analysts' expectations, investors still shed Macy's, sending shares down 5.5% to $11.67 in morning trading.

The department store recorded a loss of $88 million, or 21 cents per share, compared with a loss of $59 million, or 14 cents per share, a year earlier.

Excluding restructuring charges, the company lost 16 cents a share. Analysts expected a loss of 20 cents.

Sales dropped 9.5% to $5.2 billion from $5.75 billion last year, its lowest level since the first quarter of 2005 before the acquisition of May.

"Today's first quarter numbers from Macy's are sobering," Craig Johnson, president of Consumer Growth Partners, said in a note on Wednesday. "On the one hand, Macy's beat its very low bar of expectations by losing only 16 cents per share versus its guidance from just last week of 19 to 21 cents. However, its total sales declined by 9.5% in the quarter, when overall retail sales fell by about 4% from last year -- meaning that it is continuing to lose market share."

Last week, Macy's posted a 9.1% decline in April same-store sales.

Despite dismal results, it still announced that it expects full-year earnings in the range of 40 cents to 55 cents a share.

Department stores, of course, were losing steam well before the recession, as shoppers having been opting for specialty stores with more personalized customer service and fashion-forward merchandise.


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