Macy's (M) shift to online sales might be squeezing its profits

Macy's CFO: We'll control expenses and invest

CINCINNATI - Disappointing earnings results at Macy’s Inc. made investors nervous on a number of fronts Wednesday

Macy’s second-quarter earnings rose 11 percent to 80 cents per share, but Wall Street analysts were expecting 86 cents. Sales increased 3.3 percent to $6.27 billion, but that was $30 million short of analyst expectations.

Macy’s shares fell 5.5 percent to close at $56.47.

Because Macy’s rarely falls short of Wall Street expectations, some fear more bad news is on the way – with several big retailers slated to deliver earnings results later this week, including Walmart, Kohl’s, J.C. Penney and Nordstrom.

Some retail watchers theorized that consumers haven’t yet emerged from their post-recession stupor and the economy may not be rebounding after all.

As if that’s not enough, at least one expert sees a bigger problem in Macy’s results.

“The shift to online retail is happening faster that most people expected. They’re spending a whole lot of money to catch up on the Internet,” said Rahul Sharma, founder and managing director of NeevCapital, a London –based consulting company.

That could be a big problem for brick and mortar retailers like Macy’s with 840 stores and 150 million square feet of retail space. The company has been gradually reducing retail space – shedding 4.5 million square feet since 2010. At the same time, it is investing heavily in distribution centers and technology to better enable what it calls omnichannel shopping.

Become a WCPO Insider to learn more about Sharma's take on this crucial issue - and what Macy's has to say about it.

To continue reading: Subscribe Now or


Comments

or Subscribe now so you can share your opinion! It’s only a penny for a month trial.