DEPARTMENT STORES Macy’s Loses Its Shirt

“We consider our results to be unsatisfactory,” conceded the management of R.H. Macy in a letter to investors last week. This was less a case of candid confession than of acknowledging the obvious. Accompanying the letter was the Manhattan-based retailer’s report on the most recent quarter, showing its largest three-month loss in three years: $100 million, far more severe than the usual post-Christmas doldrums.

Macy’s attributes the calamity at its cash registers to the “sluggish economy in the Northeast,” where most of its stores are situated, as well as “unsettled conditions in the Middle East.” Supporting this assessment: the latest consumer confidence index, released last week by the Conference Board, which showed a drop for the second month in a row. But Macy’s is betting big that it will recoup when the recession ends. It has revealed plans to open 11 new outlets and expand or modernize existing stores during the next five years.