Messi The company lowered its full-year sales forecast on Wednesday, as the store operator said it was dealing with more selective shoppers and more promotions.
The retailer posted a mixed quarter, beating Wall Street earnings expectations but missing revenue.
Macy’s said it now expects net sales to be between $22.1 billion and $22.4 billion, down from the $22.3 billion to $22.9 billion range it previously forecast. That would also be a year-over-year decline from the $23.09 billion it reported for fiscal 2023.
Macy’s expects comparable sales, which take into account the impact of store openings and closings, to range from a decline of about 2% to a decline of about 0.5%. It previously forecast comparable sales to range from a decline of about 1% to a gain of 1.5%. That measure includes owned and licensed sales, which include merchandise Macy’s owns and items from brands that pay for space inside its stores, along with Macy’s external online marketplace.
The new forecast range “provides flexibility to address ongoing uncertainty in the discretionary consumer market,” the department store operator said in a news release.
In an interview with CNBC, CEO Tony Spring said customers aren’t spending freely across all of Macy’s brands — even luxury department store Bloomingdale’s.
“We’re definitely seeing a softness, a softness, a delay in conversion,” he said. “People are responding to things they want, things that are priced steeply, novelty, but even the affluent consumer is not spending as much as they were a year ago.”
Here’s what Macy’s reported for its fiscal second quarter compared to what Wall Street expected, based on a survey of analysts conducted by LSEG:
- Earnings per share: 53 cents adjusted vs. 30 cents expected
- profit: $4.94 billion vs. $4.94 billion expected $5.12 billion
Shares were down about 8% in premarket trading.
The iconic store is looking to return to a more stable position and sustainable growth. Spring announced in February that the retailer would close about 150 — or roughly a third — of its namesake stores and invest in the roughly 350 remaining locations. It plans to close the locations by early 2027.
It’s also opening new, smaller Macy’s stores in suburban malls and adding new locations for its top-performing brands, such as Bloomingdale’s and Bluemercury.
However, Macy’s results in the last quarter revealed its struggle to make that comeback at a time when consumers are more selective about purchases – especially items that represent wants rather than needs.
Net sales were down from $5.13 billion in the same period last year.
Macy’s namesake brand continued to be the company’s weakest performer. Comparable sales fell 3.6% on a proprietary plus licensing basis, including third-party marketplace.
At Bloomingdale’s, comparable sales fell 1.4% on a proprietary and licensing basis, including the third-party marketplace. Bluemercury comparable sales rose 2%, marking the beauty brand’s 14th consecutive quarter of comparable sales growth.
In the three-month period ending Aug. 3, Messi’s net income was $150 million, or 53 cents per share, compared with a loss of $22 million, or 8 cents per share, in the same period a year earlier.
Macy’s stressed that it has made progress on its turnaround plan, which it unveiled in February shortly after Spring took over the top role. At the first 50 of its stores that received the additional investment, comparable sales rose 1% on an equity plus license basis. That marks the second straight quarter of positive comparable sales at those stores since the plan began.
However, even excluding the weaker stores that Macy’s is closing, sales were lackluster. Comparable sales for its namesake brand — which includes Macy’s stores that will remain open and online sales — fell 3.3% on an owned and licensed basis, including third-party marketplaces.
In addition to the volatile sales environment, Macy’s leaders have also faced an attempt by an activist group to take the company private. Macy’s said last month that its board of directors had unanimously decided to end negotiations with Arkhouse Management and Brigade Capital.
Macy’s shares closed Tuesday at $17.74, giving the company a market cap of $4.9 billion. As of Tuesday’s close, the company’s stock is down about 12% so far this year. That tracks the S&P 500’s gain of about 17% over the same period.
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