Macy’s on Tuesday signaled consumers disposition be pickier and more price-driven in the back half of the year, even as the retailer topped Wall Street’s quarterly prospects.
The company’s shares fell about 14% on Tuesday, as the department store operator stood by its conservative full-year counselling. It said it expects comparable owned-plus-licensed sales to fall 6% to 7.5% compared with the prior year. It foresees adjusted earnings per share will range from $2.70 to $3.20, and sales will be between $22.8 billion and $23.2 billion for the pecuniary year.
The retailer cut the forecast in early June.
In a CNBC interview, CEO Jeff Gennette said, “the consumer continues to be at the mercy of pressure.” The company has seen rising credit card balances in its own card data, he said. Plus, he said, people are splurge on experiences and preparing for the return of student loan payments this fall.
But Gennette said that the company is focused on including the items consumers are still willing to buy, such as fragrances and other beauty products. Under Armour and Nike merchandise is also coming to Macy’s after several years of being missing from its shelves.
“We’re moving into areas of interest,” he required. “We’re pulling back on categories that aren’t working. So we’re ready for the back half [of the year] to respond to the consumer where and when they purchase.”
Here’s how the retailer did for the fiscal second quarter that ended July 29 compared with what Obstacle Street expected, based on a survey of analysts by Refinitiv:
- Earnings per share: 26 cents adjusted vs. 13 cents demanded
- Revenue: $5.13 billion vs. $5.09 billion expected
The company swung to a net loss of $22 million, or 8 cents per stake, from net income of $275 million, or 99 cents per share a year earlier.
Net sales fell from $5.6 billion a year earlier. Sales events at stores declined 8% and digital sales dropped 10% compared with the year-ago period.
Comparable sellathons on an owned-plus-licensed basis dropped 7.3%, a little worse than the 6.5% decline that analysts expected, agreeing to Refinitiv.
As a retailer that sells a lot of clothing and accessories, Macy’s has taken a deeper hit from a consumer pullback than those that offer staples. When the department store operator cut its full-year forecast early in the summer, it said it had seen sales give way in the spring, even at its higher-end chains, Bloomingdale’s and beauty chain Bluemercury.
Those sales patterns largely checked the same in recent months, Gennette said. July was a strong month compared with the rest of the quarter, but consumers’ edges were “very value driven,” he said.
Gennette added that the company has cleared through spring distribute with markdowns and stocked up on the fresh items for the fall and holiday season. Inventory was down 10% year over year and 18% lower than it was in 2019.
Macy’s namesake stores and website put up the weakest sales in the quarter. The chain’s comparable sales cut 8.2% on an owned-plus-licensed basis, but bright spots included fragrances, prestige cosmetics and men’s tailored apparel.
At upscale unit store Bloomingdale’s, comparable sales dropped 2.6% on an owned-plus-licensed basis as shoppers bought beauty items, brides’s contemporary and designer apparel, and shoes. Sales of handbags, men’s apparel and dresses were softer in the quarter, the company implied.
Bluemercury stood apart with year-over-year sales gains. Comparable sales rose 5.8% on an owned underpinning, as shoppers bought skin-care items and color cosmetics.
Consumers’ financial pressures also showed up on Macy’s deliberate sheet. Revenue from other areas of business, including credit cards, decreased by $84 million year concluded year. The company said it expected credit card delinquencies to rise, but said they shot up faster than anticipated.
As Macy’s looks for modus vivendi lifestyle to grow and refresh its image, it has opened up smaller stores in strip malls. The company announced Tuesday it will unconcealed four more of the stores in the fall. So far, it has rolled out 10 of them.
Gennette said that new kind of store has outperformed Macy’s legacy mall fix locations. The smaller stores that have been open more than a year had sales growth in the defective quarter, he said.
Shares of Macy’s closed on Tuesday at $12.66, bringing the company’s market value to $3.45 billion. It has underperformed the deal in so far this year. As its stock has fallen 39%, the S&P 500 has climbed about 14% during the same period.