(Reuters) – Macy’s Inc (N:) cut its annual profit forecast for the second time this year on Thursday after a bigger-than-expected drop in third-quarter comparable store sales due to weak international tourism and sluggish mall traffic.
Shares of the department store operator fell 6% in premarket trading.
A weakening yuan has resulted in a fall in Chinese tourists visiting the United States this year and has weighed on sales at major retailers as the high spending travelers account for a significant portion of their revenue.
Comparable sales at Macy’s owned and licensed stores fell 3.5% in the third quarter ended Nov. 2, the first drop in two years, and bigger than the 1% decrease analysts had expected, according to IBES data from Refinitiv.
However, Macy’s said it had completed a revamp of about 150 stores with fresh interiors and better assortment of merchandise in time for the crucial holiday shopping season, which kicks off next week.
The company now expects 2019 adjusted profit of between $2.57 per share and $2.77 per share, compared with its previous forecast of between $2.85 and $3.05.
It also projected full-year total comparable sales to fall between 1% and 1.5%, compared to a previous forecast of up to a 1% rise.
Adjusted net income attributable to Macy’s shareholders fell to $21 million, or 7 cents per share, in the quarter, from $83 million, or 27 cents per share, a year earlier.
Analysts had expected the company to break-even on a per share basis.
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