What's Wrong With Macy's? Second Quarter Profit Drops 77%

According to the Chicago Sun-Times, Macy’s has cut their yearly outlook after their second quarter profits dropped 77%. What’s the big problem?

The merger with May has not gone well for Macy’s, and they’re having trouble integrating the Marshall Field’s stores. From the Sun-Times:

Profits were hurt by higher-than-expected costs of integrating more than 400 former May Department Stores, including the Marshall Field’s chain. Macy’s bought the May Department Stores for $11 billion in August 2005.

But cost cuts helped shrink selling, general and administrative expenses.

Sales at the former Marshall Field’s and other May stores continue to disappoint, but are closing the gap in performance with long-time Macy’s stores, Chief Financial Officer Karen Hoguet said in a conference call with analysts.

The gap should close next year, but the converted Marshall Field’s stores might take longer to gain acceptance, Hoguet said. Long-time Macy’s stores were hurt by missteps in color and style in ready-to-wear clothing in the spring. Hoguet said Macy’s executives believe they have the right fashions for fall, such as denim, wide-leg pants and novelty jackets and coats.

Are they really that shocked that the Marshall Field’s faithful have stayed away from Macy’s? Are wide-leg pants the answer?

Tell us: What’s wrong with Macy’s?

Macy’s cuts outlook after profit falls 77 percent for the quarter [Chicago Sun-Times]
(Photo:Meghann Marco)

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