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Macy’s 2Q15 Sales Fall Short of Wall Street’s Expectations

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Macy’s 2Q15 sales

As mentioned in Part 1 of this series, leading department store Macy’s (M) reported its second-quarter results on August 12. Macy’s 2Q15 sales declined for the second straight quarter to $6.1 billion. The company missed the consensus Wall Street analyst sales estimate of $6.2 billion.

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Factors that impacted sales

Macy’s 2Q15 sales declined by 2.6% from the comparable quarter of last year. The company attributes this decline to a set of internal factors as well as external ones. The quarter was affected by the absence of a friend and family event like the one that had a positive impact on the second quarter of the previous year. The quarter also saw slower growth in some of the store’s core categories, including fashion jewelry and watches. Meanwhile, handbags and fragrances, also core categories, performed quite well.

The company also blames the strong dollar for adversely affecting international tourist spending at its stores. Macy’s chief financial officer Karen Hoguet said that consumers are preferring to spend at restaurants, on recreational services, on healthcare, and on electronics instead of on apparel and home furnishing merchandise.

Rivals reported better sales

Macy’s peers in the department store industry posted better sales growth in 2Q15. JC Penney (JCP), Kohl’s (KSS), and Nordstrom (JWN) reported sales growth of 2.7%, 0.6%, and 9.1%, respectively, in 2Q15. Higher sales at JCPenney were driven by the strong performance of its Sephora beauty business as well as by men’s, home, and fine jewelry merchandise.

Kohl’s attributes its tepid sales growth to a higher-than-anticipated shift in tax-free back-to-school sales in some states from July into August. Nordstrom’s impressive sales growth in 2Q15 was a result of growth across its full-line stores, off-price Rack stores, and online businesses.

Macy’s, Kohl’s, and Nordstrom are part of the First Trust Consumer Discretionary AlphaDEX Fund (FXD) and the iShares MSCI ACWI ETF (ACWI). Together, these department stores constitute 1.6% of the portfolio holdings of FXD and 0.2% of ACWI.

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