Macy’s Loses $155.4 Million in Quarter
R. H. Macy & Co., struggling under a huge debt load and bogged down by the persistent national retailing slump, said Tuesday that its losses more than doubled in the latest quarter to $155.4 million, despite a modest sales increase.
The company, which also operates the Bullock’s and I. Magnin stores, said sales for the first quarter ended Nov. 2 were $1.6 billion, up 3% from the year-ago period. Losses in the prior-year period were $56.5 million.
Equally significant, operating profit for the quarter--profit before interest expenses, taxes and extraordinary items--was just $2.7 million, compared to $81.3 million a year earlier. The drop reflected discounting and large advertising expenses, the company said.
Company executives said the outlook for the holiday sales season, the single most important period of the year, remains dismal, dashing hopes that an upturn is on the immediate horizon.
Macy’s is a privately held company, but its junk bonds, which are publicly traded, fell on the earnings news. The 14.5% bonds due 2001 dropped $4 to $51. They have a face value of $100.
The results triggered more speculation that Macy’s is in danger of following the Allied, Federated and Carter Hawley Hale department store chains into bankruptcy court. They sought protection from creditors after difficult holiday selling seasons the past two years.
However, analysts cautioned against drawing comparisons between Macy’s and the other troubled chains. “Under ordinary circumstances, a performance like this could make bankruptcy a likely possibility,” said Kurt Barnard, a New York retailing analysts. “But Macy’s is no ordinary story.”
Barnard argued that Macy’s creditors, who are owed more than $4 billion, have little to gain from pushing the retailer into a lengthy, costly reorganization. “Besides, creditors have far more faith in (Macy’s Chairman Edward S.) Ed Finkelstein than they had in Robert Campeau (former chairman of the Allied and Federated chains) or Phil Hawley (Carter Hawley Hale chairman).”
