Retailers heading into a tougher-than-usual holiday season are already experiencing financial woes as third-quarter sales and profits failed to meet previous goals.
Macy's Inc. (Cincinnati) announced sales in the third quarter of 2008 totaled declined 7 percent to $5.4 billion, compared with $5.9 billion in the same period last year. On a same-store basis, Macy's third quarter sales were down 6.0 percent. The department store retailer’s year-to-date sales totaled $16.9 billion, down 4.3 percent from total sales of the first 39 weeks of 2007. Year-to-date same-store sales are down 3.5 percent.
“Macy's remains financially healthy, with strong cash flow, a solid balance sheet and ample borrowing capacity,” says Terry Lundgren, Macy's chairman, president and chief executive officer. “We are committed to continuing to aggressively manage expenses and inventories consistent with planned sales levels. In recognition of the weak economy, we reduced our budget for 2009 capital expenditures from approximately $1 billion to a range of $550 million to $600 million, compared with approximately $950 million in 2008.”
Looking ahead, the company expects same-store sales in the fourth quarter to be down in the range of 1 to 6 percent, which would result in same-store sales for the fall season (third and fourth quarters combined) down in the range of 3 to 6 percent, consistent with previous guidance.
Discount retailer TJX Cos., which operates T.J. Maxx and Marshalls stores, reported a 6 percent decline in third-quarter profit. The company expects disappointing fourth-quarter sales resulting in cutting its fiscal 2009 outlook.
Apparel retailer Liz Claiborne also posted a third-quarter loss, announcing it lost $68 million compared with a profit of $33 million during the same period last year. Sales during the period ending October 4 dropped 16 percent.