macy’s department store The department store operator on Wednesday lowered its full-year sales forecast, saying it was competing with selective shoppers and more promotions.
The retailer reported mixed quarterly results, with profit beating Wall Street expectations but revenue missing expectations.
Macy’s said it now expects net sales to be between $22.1 billion and $22.4 billion, down from its previous forecast of a range of $22.3 billion to $22.9 billion. This would also represent an annual decrease from the $23.09 billion reported in fiscal 2023.
Macy’s expects comparable sales, excluding the impact of store openings and store closures, to decline by approximately 2% to approximately 0.5%. The company had expected comparable sales to fall about 1% to grow 1.5%. The metric includes owned and licensed sales, which include merchandise owned by Macy’s and brands that pay for space in its stores, as well as Macy’s third-party online marketplaces.
The department store operator said in a release that the new outlook range “provides flexibility to address ongoing uncertainty in the consumer discretionary market.”
In an interview with CNBC, CEO Tony Spring said customers are not spending freely on all Macy’s brands, even at high-end department store Bloomingdale’s.
“We’re seeing a shift in purchasing where there’s definitely weakness, caution and delays,” he said. “People are responding to what they want, what’s expensive, what’s novel, but even affluent consumers It won’t cost as much as it did a year ago.”
Here’s how Macy’s fiscal second-quarter report compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted 53 cents, expected 30 cents
- income: US$4.94 billion, expected US$5.12 billion
Shares fell about 8% in premarket trading.
The iconic department store is working hard to get back on a stable footing and continue to grow. Spring announced in February that the retailer would close about 150, or nearly a third, of its namesake stores and invest in its remaining roughly 350 stores. It plans to close these locations in early 2027.
The company is also opening new, smaller Macy’s stores in suburban malls and adding new stores to its higher-performing brands, Bloomingdale’s and Bluemercury.
However, Macy’s recent quarter results show that it will be difficult for Macy’s to recover as consumers become more picky about their purchases, especially those items that are wants rather than needs.
Net sales fell from $5.13 billion a year earlier.
The namesake Macy’s brand remains the company’s worst-performing brand. Comparable sales on an owned plus licensed basis, including third-party markets, decreased 3.6%.
At Bloomingdale’s, comparable sales of owned and licensed, including third-party markets, fell 1.4%. Bluemercury’s comparable sales grew 2%, marking the beauty brand’s 14th consecutive quarter of comparable sales growth.
In the three months ended August 3, Macy’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 last year.
Macy’s emphasized progress in its turnaround plan, which was unveiled in February shortly after Spring took the company’s top job. Among the top 50 stores that received the additional investment, comparable sales of own plus licensed products increased by 1%. This marks the second consecutive quarter of positive comparable sales growth at these stores since the program began.
However, even excluding weaker stores that Macy’s is closing, sales underperformed. Comparable sales for its forward namesake brand, which includes Macy’s stores that will remain open and online sales, fell 3.3% on an owned-plus-licensed basis, which includes third-party markets.
In addition to a volatile sales environment, Macy’s leaders face demands from an activist group to take the company private. Macy’s said last month that its board of directors unanimously decided to end negotiations with Arkhouse Management and Brigade Capital.
Macy’s closed Tuesday at $17.74, giving the company a market value of $4.9 billion. As of Tuesday’s close, the company’s shares were down about 12% year to date. That lagged the S&P 500’s gain of about 17% during the same period.
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