(Background and conference call information added.)
may have reported a whopping 90% plunge in second-quarter earnings, but the department store raised its full-year guidance, the first sign that the retail industry could be in for a very merry Christmas.
Investors, though, seemed more concerned with the company's huge profit decline and are worried its new guidance could miss Wall Street's estimates, sending shares down 2% to $15.14 in pre-market trading.
During the quarter, the company earned $7 million, or 2 cents a share, weighed down by consolidation and store closing costs. This compares with $73 million, or 17 cents, in the year-ago period.
Excluding restructuring charges that amounted to 18 cents a share, the company earned 20 cents, beating analysts' guidance of 15 to 17 cents a share.
Earlier in the year the department store said it would shutter 11 stores.
Macy's has been driving profits through agressive cost cuts like the elimination of 7,000 jobs it announced in February. It has also reduced capital spending, slashed its divident and shrunk its contributions to employees' retirement funds.
Sales declined 10% to $5.16 billion, while same-store sales tumbled 9.5%. The company said men's and women's moderate apparel, housewares, cosmetics and kids led sales. It also saw strength in private labels and exclusive brands like Tommy Hilfiger and Martha Stewart.
But sales were dragged down by furniture, mattresses and handbags.
Macy's now expects full-year earnings in the range of 70 to 80 cents a share, up from a prior forecast of 40 to 55 cents. Analysts, however, were already expecting earnings of 80 cents.
Like many companies Macy's has been working to pick up market share in local markets. Last year, it began rolling out a program called "My Macy's" to localize merchandising to regional markets, and CFO Karen Hoguet said in a confernece call on Wednesday that she's pleased with the results so far.
The idea is to concentrate Macy's top talent in local markets to get a better read on trends -- and it looks like it is working. During the quarter, My Macy's districts outperformed its other stores.
Macy's was one of the first major retailers to report earnings. It will be followed by
on Thursday and
Abercrombie & Fitch
-- Reported by Jeanine Poggi in New York.
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