Macy's in profit warning as sales slump

US department store Macy's has seen its income plunge 40% in the first three months of the year and it has slashed profit forecasts for the whole year.

Sales have been hit by falling tourist numbers because of the strong dollar, and competition from discounters like TJ Maxx and online retailers.

It follows retailer Gap's announcement this week that its sales also fell in the same period.

Macy's revenues fell 7.4%, sending its shares down 10% to a four-year low.

Revenues fell to $5.77bn from $6.23bn in the same quarter a year ago - the fifth consecutive quarterly fall.

It now expects comparable store sales this year to fall 3-4% rather than the 1% forecast by industry analysts.

In January Macy's and rival JC Penney's were forced to axe thousands of jobs and close stores.

Macy's Chairman and CEO Terry Lundgren said in a statement: "We are not counting on the consumer to spend more, so we are working harder to give customers more reasons to buy from us."

The company opened a group of Macy's Backstage stores last year to compete with discount stores and is opening nine more in the next six months.

It has also expanded online by acquiring Bluemercury, an upscale beauty and spa company.

Mr Lundgren said: "Given that the first quarter is a relatively small portion of the total year, we have an opportunity to make up some ground in the months ahead, and particularly in the fourth quarter."