• Income slides to US$7m
  • Q2 sales of $5.2bn
  • Same-store sales down 9.5%


US department store operator Macy's has beat second quarter earnings expectations despite posting a 90% drop in second quarter profit.

"We were able to exceed our expectations with strong earnings and cash flow in the second quarter, despite lower sales in an economic environment that continues to be very difficult," said Terry J. Lundgren, Macy's chairman, president and chief executive officer.

Net income fell to US$7m, from $73 in the comparable period last year, and included restructuring charges of $34m.

Sales in the quarter totalled $5.164bn, down 9.7% from last year's $5.718bn. On a same-store basis, Macy's second quarter sales were down 9.5%.

For the year to date, Macy's sales are down 9.6% to $10.363bn, and same-store year-to-date sales are down 9.3%.

Lundgren added: "We successfully lowered inventories and managed expenses to align more closely with current levels of business.

"Our second quarter same-store sales performed as well as or better than most department store retailers even while we were completing the largest organisational transition in Macy's recent history. Most of that transition work is behind us now.

"Our new unified organisational structure is settling in and working well. It has allowed us to streamline decision-making and build closer relationships with our key vendor resources."

The company expects same-store sales in the second half of fiscal 2009 to be in the range of down 5% to 6%. This would result in full-year 2009 same-store sales to be down between 7% and 7.5% - within original guidance.

The Cincinnati-based retailer, which operates the Macy's and Bloomingdale's stores, earlier this year announced plans to axe 7,000 jobs and centralise its buying and merchandise planning operations as part of a range of measures aimed at reducing costs. 

It also hoped to drive sales through a national rollout of its My Macys locations which tailor merchandise to the needs of local customers.