Macy's cuts sales forecasts after first quarter sales decline

Macy's shopping bag Macy's operates about 840 stores in 45 states in the US

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US department store chain Macy's has cut its full-year sales forecasts to make up for first-quarter losses, when bad weather kept shoppers away.

Macy's cut its same-store sales forecast to a range of 1.5% to 2% for the full year, from a previous forecast of 2.5% to 3%.

Shares in the company, which also owns Bloomingdale's, were down 4% at $56.77 in early New York trading.

Separately, the US Commerce Department said July retail sales were unchanged.

Consumer spending accounts for 70% of economic activity in the United States. With the figures showing a hesitancy to spend, the US economy could be hurt as a result.

While spending dipped at US department stores and car dealerships, losses were offset by gains at grocery stores, petrol stations, restaurants, clothing shops and building material stores.

Macy's earnings for the quarter failed to meet analysts' estimates.

The store's net income rose to $292m (£175m), or 80 cents per share, from $281m (£163m), or 72 cents per share, a year earlier.

Macy's chairman and chief executive officer Terry J Lundgren said: "We are approaching the second half of 2014 with confident optimism... tempered with the reality that many customers still are not feeling comfortable about spending more in an uncertain economic environment."

Despite US employers adding more than 200,000 jobs a month for the past six months, wages have failed to rise above inflation, which has hit spending.

Retail sales have increased 3.7% over the past 12 months, but economists doubt that spending can grow much faster if incomes do not increase.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Consumers just don't have the cash flow to finance sustained gains above 4%."

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