Macy's Inc., the second-largest U.S. department store company, cut its annual profit forecast amid a sales decline and yesterday said it will close 11 stores, including one at the Mauna Lani Bay Hotel on the Big Island.

Profit for the year is expected to be as little as $1.10 a share, compared with an earlier minimum projection of $1.30, the company announced. Macy's said sales at stores open at least a year are expected to be down 7.5 percent in the fourth quarter, compared with an earlier prediction of as much as 6 percent.

Macy's is among retailers struggling with declining sales as consumers cut back on spending during the recession. Job cuts, sinking home values and tighter credit have discouraged shoppers from buying the kinds of goods that department stores sell, including handbags, jewelry and women's apparel.

Terry J. Lundgren, chairman and chief executive of Macy's, said the store closing plan was a difficult but necessary decision to adjust to changing market conditions.

"These closings are part of our normal-course process to prune underperforming locations each year in order to maintain a healthy portfolio of stores," he said in a statement. "While new store growth has slowed in the current economy, our long-term strategy is to continue to selectively add new stores while closing those that are underperforming."

The Cincinnati-based retailer last year opened four Macy's stores and one furniture gallery. It also reopened a New Orleans store damaged by Hurricane Katrina.

This year, Macy's expects to open three new stores and one replacement store. After the planned store closings, Macy's will operate 848 stores, including 40 Bloomingdale's stores.

Closed will be two stores in each of Colorado and Pennsylvania, and one each in California, Florida, Hawai'i, Indiana, Minnesota, Missouri and Tennessee. Those locations employ a total of 960 people.

In Hawai'i, Macy's has 19 stores — 11 department stores and eight resort and specialty stores.

The 3,000-square-foot resort store at Mauna Lani opened in 1983 as part of the local Liberty House store chain, and has three employees.

Macy's bought Liberty House in 2001 for about $200 million shortly after that chain emerged from bankruptcy.

Macy's said employees affected by the closures may be considered for open positions at other store locations. Employees who are laid off by a store closing will receive severance benefits.

The Mauna Lani store is the only one that will not hold a clearance sale before closing.

Macy's Inc., formerly known as Federated Department Stores Inc., is one of the nation's largest retailers, with fiscal 2007 sales of $26.3 billion and stores in 45 states, the District of Columbia, Guam and Puerto Rico. Among department store chains, the company trails only Sears Holdings Corp. in annual sales.

Macy's said costs associated with the 11 store closings will be about $65 million, most of which will be booked in the fourth quarter of 2008.

Shares of Macy's stock closed down 38 cents, or 3 percent, at $10.93 on the New York Stock Exchange yesterday. The shares fell 60 percent last year.