Macy’s tumbles as tourism slump hurts profits
Written by Hit Music Radio News on 14/08/2019
Shares in US department store chain Macy’s have plunged after a decline in tourist shoppers helped dent sales and profits, while it also grapples with the prospect of new tariffs on Chinese goods.
Macy’s said it was cutting its full-year earnings forecast after a “slow start” to its latest financial quarter forced it to discount poorly selling lines in women’s sportswear and summer clothes.
Like-for-like sales for the three months to 3 August rose 0.3% compared with the same period a year ago, but net profits were down by 48% to $86m (£79m).
Macy’s added that it was in “active discussions” with suppliers to try to mitigate the impact of new tariffs on Chinese imports to the US due to come into force later this year.
Shares fell 13%, on a day of wider turbulence for US stock markets gripped by recession fears.
The company is America’s biggest department store operator, with a 680-strong network under the Macy’s and Bloomingdale’s brands.
Its flagship Manhattan site is well known to tourists visiting New York and chief executive Jeff Genette cited an “accelerated decline in international tourism” as one of the factors in its sales growth missing expectations.
Overseas visits to the US have been hit by the strength of the dollar over the past year, with trade tensions between Washington and Beijing apparently also dragging on trips by tourists from China.
Ohio-based Macy’s, like other US store operators, has been struggling to adjust to the fast-changing nature of retail over recent years, with many consumers preferring to go online rather than visit a shopping mall.
It has cut more than 100 stores and thousands of jobs since 2015.
The sector is now also facing the challenge posed by Donald Trump’s imposition of 10% tariffs on $300bn (£249bn) worth of Chinese goods from next month.
Mr Trump’s administration announced on Tuesday that it was postponing many of the tariffs until December – with goods such as mobile phones and laptops among those being spared.
But this looked likely to have little benefit for fashion retailers.
Analysis from UBS found that of 789 clothing and footwear categories on the original list of tariffs announced at the start of this month, only 17% would be delayed.
Mr Gennette said he believed 10% tariffs on Chinese imports to be manageable but that it would be harder to maintain pricing if 25% duties were imposed on all remaining imports from China.
“There’s no customer appetite for price increases,” he said.
© Sky News 2019