Macy’s Inc., the largest U.S. department-store chain, reported first-quarter earnings that trailed analysts’ estimates as bad weather in Northeastern states and product delays at the West Coast ports hurt sales.
Net income in the quarter ended May 2 fell 14 percent to $193 million, or 56 cents a share, from $224 million, or 60 cents, a year earlier, the Cincinnati-based company said in a statement on Wednesday. Analysts projected 62 cents, the average of 20 estimates compiled by Bloomberg.
Unseasonably cold weather late into the spring in the Northeastern states kept shoppers out of stores during in the quarter. Macy’s said in November that congestion at the West Coast ports was also delaying products from hitting the shelves. The delays could cost retailers as much as $7 billion this year, according to the consulting firm Kurt Salmon.
“Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels,” Chief Executive Officer Terry Lundgren said in the statement.
Macy’s shares fell 2.4 percent to $63.73 at the close in New York. The stock has dropped 3.1 percent this year.
Lundgren also said sales in the quarter were hurt by lower spending by international tourists at flagship Macy’s and Bloomingdale’s stores. Sales fell 0.7 percent to $6.23 billion, missing the $6.31 billion average of analysts’ estimates. Same-store sales declined 0.7 percent compared with an estimate for a gain of 1.3 percent, according to Consensus Metrix.
“The question is always how are you going to make your comparable sales number,” Rick Snyder, an analyst at Maxim Group, said in an interview. “It’s a promotional environment, and it appears retailers are going to have to trade margins for sales.”
Macy’s also raised its quarterly dividend 15 percent to 36 cents a share. It also added $1.5 billion to its share repurchase program.
The company has been trying to revive sales and broaden its customer base by adding new brands and experimenting with lower-priced outlets. Macy’s also has been focused on cutting costs and reinvesting in its Web capabilities, such as allowing customers to buy items online and pick them up in a store.
Four lower-priced outlets will open in New York City this fall, the company said earlier this month. The stores could give Macy’s a presence in strip centers, where traffic is still growing, according to Rob Plaza, an analyst at Key Bank. Those locations also wouldn’t compete with mall-based stores, he said.