Macy’s shares fell Thursday because the retailer slashed its full-year guidance and said it saw a big weakening in sales in late March.
The corporate’s shares fell as much as 10% in premarket trading despite beating earnings expectations in the primary fiscal quarter.
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The department store operator said it now expects sales of $22.8 billion to $23.2 billion for the 12 months, up from the previous range of $23.7 billion to $24.2 billion. Macy’s predicts that comparable ownership-plus-licence sales will decline by 6% to 7.5% over the period, worse than its previous forecast of a decline of two% to 4%.
This 12 months, it expects adjusted earnings per share of $2.70 to $3.20 – a big reduction from its previous forecast of $3.67 to $4.11 per share.
In an interview with CNBC, CEO Jeff Gennette said the retailer took a conservative stance for the remainder of the 12 months after seeing a spring recall. He said the corporate anticipates more discounts on seasonal products and plans to cut back orders for merchandise because it prepares for the approaching quarters.
He said weaker sales were for Macy’s brands, including higher-end Bloomingdale’s and cosmetics chain Bluemercury.
Here’s how Macy’s fared within the three-month period ending April 29, in comparison with Wall Street’s predictions, based on an analyst survey by Refinitiv:
- Earnings per share: 56 cents customized in comparison with the expected 45 cents
- Income: USD 4.98 billion in comparison with the expected USD 5.04 billion
Macy’s first-quarter net income was $155 million, or 56 cents a share, compared with $286 million, or 98 cents a share, a 12 months earlier.
Revenue fell about 7% to $4.98 billion from $5.35 billion a 12 months earlier. The sale missed analysts’ forecasts.
Comparable owned and licensed sales fell 7.2% within the quarter, worse than the 4.7% drop expected by analysts surveyed by Refinitiv.
The Macy’s brand saw its biggest year-on-year declines. Comparable sales fell 7.9% on an ownership plus license basis. At Bloomingdale’s, comparable ownership and licensing sales fell 4.3%. Bluemercury’s comparable sales were up 4.3% year-on-year, but growth was slower than the double-digit or high-single-digit gains the corporate had achieved in other quarters.
Gennette said Macy’s sales have fallen as customer budgets are constrained. About half of Macy’s customers have a household income of $75,000 or less.
“They’re clearly under pressure, especially in our discretionary categories,” he said.
At Bloomingdale’s, the “aspiring shopper” who bought more luxury brands in the course of the Covid pandemic, once they had stimulus money, also fell, he said.
He added that the colder weather also hurt sales as shoppers held off on buying seasonal produce.
But Gennette said the corporate noticed “signs of life in May” because the weather warmed. He said spring apparel sales were up, especially at Bloomingdale’s. He said sales on the high-end department store are higher than last May.
Beauty was one in all the corporate’s strongest categories. A number of the popular items related to the pandemic, akin to textiles and home items, are also beginning to rebound.
As Macy’s prepares for a potentially tougher 12 months, Gennette said he has a latest reason for customers to go to the corporate in the autumn and in the course of the holidays. Starting October Nike will return to its stores and website. Macy’s received its last shipment from Nike in December 2021, because the athletic footwear company reduced bulk orders and emphasized direct sales.
Macy’s has moved a few of Nike’s footwear through a licensing partnership with Finish Line, but will start getting a fuller range, including apparel for women, men and children.
“We took a break from our collaboration and now we’re back to it,” he said.
Macy’s shares closed at $13.59 on Wednesday, bringing the corporate’s market value to $3.69 billion. Up to now this 12 months, the corporate’s shares have fallen 34%. This lags behind the nearly 9% gains of the S&P 500 and the roughly 6% decline of retail-focused XRT over the identical period.