REUTERS: Macy's Inc cut its full-year earnings forecast on Wednesday after missing estimates for quarterly profit for the first time in at least two years, as it discounted heavily to clear spring inventory, sending its shares down 17per cent.
The department store chain, whose flagship building in Manhattan is a major attraction for tourists, blamed a bigger-than-expected decline in tourist spending for the shortfall along with weak demand for its own-brand women's sportswear.
Tourist arrivals to the United States have taken a hit in the past year, hurt by a stronger dollar and escalating trade tensions between Washington and Beijing, denting the number of Chinese visitors to the country.
The number of Chinese citizens arriving in the United States dipped 2.8per cent in the first six months of the year, according to the National Travel and Tourism Office.
The results come when the 160-year-old company is pumping money into projects such as remodeling its stores and building up its off-price and online businesses to better compete in a tough U.S. retail market.
"(The results) send out a clear signal that Macy's must do more not only to revive current performance but also to secure its long-term future," said Neil Saunders, managing director at research firm GlobalData.
"A further issue is the failure to develop more compelling own brands. Macy's is way behind the curve on this."
The company now expects 2019 adjusted profit to be between US$2.85 per share to US$3.05 per share, down from a previous forecast of US$3.05 to US$3.25.
For the second quarter ended Aug. 3, net income attributable to Macy's shareholders slumped 48per cent to US$86 million, or 28 cents per share.
Analysts on average had expected the company to earn 45 cents per share, according to IBES data from Refinitiv.
"We had a slow start to the quarter and finished below our expectations," Chief Executive Officer Jeff Gennette said in a statement.
Net sales fell marginally to US$5.55 billion, largely in line with estimates, while sales at its established stores rose 0.3per cent.
Still, Macy's maintained its 2019 sales expectations, with the company saying that it entered the fall season with the "right inventory."
Macy's shares, which have declined about 35per cent this year, opened at a near 10-year low.
The company, which is the first of the department stores to report results, also dragged peers' shares. Kohl's , Nordstrom and J.C. Penney were down between 4per cent and 6per cent.
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila)