Macy’s Inc. reduced its annual profit forecast for the second time this year after reporting its first drop in same-store sales in two years.

In the quarter, net earnings fell to $2 million, or 1 cents a share, from $62 million, or 20 cents, a year ago.

On an adjusted basis, earnings fell 74.7 percent to $21 million, or 7 cents a share, from $62 million, or 27 cents, a year ago. Earnings exceeded Wall Street’s consensus estimate of break-even results.

Revenues, however, were down 4.3 percent to $5.17 billion from $5.4 billion. Wall Street had expected $5.32 billion.

Same-store sales were down 3.5 percent, on an owned plus licensed basis, versus a drop of 1 percent expected.

Macy’s now expects 2019 adjusted profit of between $2.57 per share and $2.77 per share, compared with its previous forecast of between $2.85 and $3.05. It also projected full-year total comparable sales to fall between 1 percent and 1.5 percent, compared to a previous forecast of up to a 1 percent rise.

“After seven consecutive quarters of comparable sales growth, we experienced a deceleration in our third quarter sales. While we anticipated a negative comp as we were lapping a very strong third quarter last year, the sales deceleration was steeper than we expected. However, having cleared the excess inventory we faced earlier in the year, we were able to take a more balanced approach to sales and profit in the quarter, resulting in significantly improved margin compression versus the first half of the year,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “Our third quarter sales were impacted by the late arrival of cold weather, continued soft international tourism and weaker than anticipated performance in lower tier malls. We also experienced a temporary impact on our e-commerce business due in part to work on the site in preparation for the fourth quarter. The team has completed that work, the site is upgraded and our customers can expect an improved experience this holiday season. Based primarily on the impact of our third quarter sales trend, we are updating our annual guidance.”

“We have confidence in our holiday strategies. The Macy’s, Bloomingdales and Bluemercury teams are aligned and committed to delivering a great experience for our customers in our stores, on our digital sites and through our mobile apps. We have fully updated our Growth150 stores and completed the 2019 expansion of Backstage. We have curated an expanded gift assortment with great values in all categories and developed a powerful marketing calendar for both our best and occasional customers. This holiday season, we also have even more flexible, secure and convenient fulfillment options for our customers including Pick Up in Store and Same Day Delivery,” continued Gennette.

Asset Sale Gains

Asset sale gains for the third quarter of 2019 totaled $17 million pre-tax, or $13 million after-tax. This compares to the third quarter of 2018, when asset sale gains totaled $42 million pre-tax, or $31 million after-tax.

Asset sale gains for the 39 weeks ended November 2, 2019 totaled $67 million pre-tax, or $49 million after-tax. This compares to the 39 weeks ended November 3, 2018, when asset sale gains totaled $111 million pre-tax, or $84 million after-tax.

Updated Guidance

Macy’s, Inc. is updating its previously provided annual guidance. Highlights of these revisions include:

Revised 2019 Annual Guidance

Prior 2019 Annual Guidance

Comparable sales

(owned plus licensed)

Down 1.5% to down 1.0%

Flat to up 1%

Comparable sales


Approximately 20 basis points below comparable sales on an owned plus licensed basis

Flat to up 1%

Net sales

Down 2.5% to down 2.0%

Approximately flat

Adjusted Diluted earnings per share

$2.57 to $2.77

$2.85 to $3.05

Asset sale gains

Approximately $150 million (or $0.37 per share)

Approximately $100 million (or $0.25 per share)

Annual tax rate