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US chains’ profits dip

US department stores experienced a drop in sales over the past few months as consumer confidence dipped.

At mid-market chain Macy’s, like-for-like sales during the 13 weeks to November 1 fell by 6% and total sales dropped 7% to US$5.5 billion (£3.6bn). Pre-tax losses were US$75 million (£50m) compared with a profit of US$38m (£25.3m) in 2007.

Macy’s said it expected like-for-like sales in the fourth quarter to be down 1% to 6%.

Its statement said: “If deteriorating sales trends from the latter half of the third quarter continue through the fourth quarter, sales and earnings are expected to be toward the lower end of the guidance range.”

Macy’s chairman Terry Lundgren said: “In this poor economic environment, Macy’s continues to outperform most of our competitors in same-store sales.”

Upmarket department store Nordstrom saw like-for-likes drop 11.1% in the third quarter to November 1, while value chain Kohl’s reported a 6.7% decline in like-for-likes over the same period.

The young fashion sector had mixed results. Liz Claiborne, which owns Mexx, Juicy Couture and Lucky Brand, also moved into a loss from continuing operations of US$9.4m (£6.26m) for the three months to October 4 2008, compared with a net profit of US$33m (£22m) the previous year. Net sales were down 15.9% to just over US$1bn (£666m).

Profits at casualwear group Abercrombie & Fitch were down by almost half, as like-for-like sales plummeted 14% in the 13 weeks to November 1. Post-tax profit was US$63.9 million (£42.5m), against US$117.6m (£77.8m) for the same period in 2007. Total sales dropped 8% to US$896.3m (£596.2m).

Abercrombie & Fitch chief executive Mike Jeffries said the figures reflected a drop off in consumer spending but said the business would continue to invest in global expansion.
He added: “We will continue to operate with a disciplined approach, looking for efficiencies in our operation.”

Young fashion business Urban Outfitters bucked the downward trend, as like-for-like sales rose 10% across its Urban Outfitters, Anthropologie and Free People businesses over the third quarter. Pre-tax profits rose more than a third to US$90.4m (£60m).

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