Macy's profit up but Sandy impact looms
Macy's Inc. sent out a mixed message: It raised its annual profit guidance but told investors Wednesday that superstorm Sandy would temper the start of the holiday season.
The department store chain's fourth-quarter profit forecast was below analysts' expectations and noted that this month's business would be hurt by Sandy.
The guidance came as Macy's posted a 4.3 percent increase in third-quarter net income, helped by its efforts to tailor merchandise to local markets and bring in trendy exclusive brands.
"Were it not for Hurricane Sandy, we would be even more optimistic about the fourth quarter than what you're hearing today," Karen Hoguet, Macy's chief financial officer, told analysts during a conference call. The company closed the book on the third quarter two days before Sandy steamed through the densely populated mid-Atlantic and Northeast regions.
As a result of Sandy, Macy's extended a sale for customers living in the hard-hit region and was issuing coupons on home goods for those who've experienced damage to their homes.
The company, which operates upscale Bloomingdale's in addition to its namesake chain, temporarily closed 200 stores at one point last week because of Sandy. But the impact goes beyond that. Hoguet said that customers in the hard-hit areas of Long Island and New Jersey "have other priorities right now." Many are dealing with issues ranging from transportation difficulties to power outages to more serious problems like the loss of personal property, she said.
Macy's Inc., a standout among its peers throughout the economic recovery, is the first of the major retailers to report third-quarter results that should provide insight into Americans' mindset heading into the crucial holiday season. Shoppers are already dealing with a slow economic recovery. Sandy is adding to their troubles.
The fear: Consumers who are now being forced to buy cleanup supplies and pay for expensive repairs in the aftermath of the storm may feel less inclined to spend for the holidays.
Still, Hoguet said she is confident that Macy's business will remain resilient despite the disruptions to business.
"We have no intention of deviating from this path of growth," Hoguet said.