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UPDATE 3-Macy's profit tops estimates, but sales decline to continue
February 21, 2017 / 1:30 PM / 7 months ago

UPDATE 3-Macy's profit tops estimates, but sales decline to continue

* Q4 adj profit $2.02/shr vs est $1.96/shr

* Q4 comp sales down 2.1 pct vs est fall of 2.2 pct

* Shares down 3.3 pct (Adds details from conference call, updates shares)

By Sruthi Ramakrishnan and Siddharth Cavale

Feb 21 (Reuters) - Department store operator Macy’s Inc reported a higher-than-expected quarterly profit, helped by the sale of some of its stores and lower costs and taxes, sending its shares up 3.3 percent in morning trading on Tuesday.

The company, however, said it would post another year of decline in sales as, like other department store chains, it struggles to overcome stiff competition from Amazon.com Inc and weak demand for clothes and accessories.

Macy’s is in the midst of a turnaround engineered by Chairman and Chief Executive Terry Lundgren, closing underperforming stores and separating its real estate assets from its retail business to better monetize its physical stores.

Macy’s assets, worth about $21 billion, have made the company a lucrative acquisition target. Canadian retailer and Saks Fifth Avenue owner Hudson’s Bay Co offered to buy the company earlier this month, Reuters reported.

Under its turnaround program, the company plans to close an additional 34 stores in the next few years, after shutting 66 stores last year.

The company said on Tuesday it sold its men’s clothing store in San Francisco’s Union Square for $250 million.

The retailer is also revamping its beauty business, testing new merchandise and simplifying pricing.

Still, growth in the company’s underlying business looks distant.

Macy’s said it expects total comparable sales to fall 2-3 percent in fiscal 2017, following a 2.9 percent decline in 2016.

During the important holiday quarter, sales in Macy’s stores open at least a year, fell 2.1 percent, compared with the 2.2 percent drop analysts polled by research firm Consensus Metrix had expected.

Net sales fell 4 percent to $8.52 billion - marking the eighth straight quarter of decline. Analysts on average had expected $8.62 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to its shareholders fell to $475 million, or $1.54 per share, in the fourth quarter ended Jan. 28, from $544 million, or $1.73 per share, a year earlier.

Excluding items, the company earned $2.02 per share, beating the average analysts’ estimate of $1.96, according to Thomson Reuters I/B/E/S.

In contrast, Wal-Mart Stores Inc reported a 2.8 percent rise in U.S. sales in the fourth quarter, helped by higher store traffic and strong online sales. (Reporting by Sruthi Ramakrishnan and Siddharth Cavale in Bengaluru; Editing by Maju Samuel and Shounak Dasgupta)

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