Macy’s Shares fell on Thursday after the retailer slashed its full-year outlook and said sales fell sharply in late March.
The company’s stock fell 10% in premarket trading, even though it beat first-quarter earnings estimates.
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The department store operator said it now expects full-year sales of $22.8 billion to $23.2 billion, down from a previous range of $23.7 billion to $24.2 billion. Macy’s expects comparable owned plus licensed sales to decline between 6% and 7.5% in the period, down from a previous forecast of a decline of 2% to 4%.
This year, it expects adjusted earnings of $2.70 to $3.20 a share, down sharply from its previous guidance of $3.67 to $4.11 a share.
In an interview with CNBC, CEO Jeff Gennette said the retailer took a conservative stance for the rest of the year after pulling back in the spring. The company has lowered prices on seasonal items and slashed orders as it prepares for future quarters, he said.
Sales were weak at Macy’s brands, including high-end Bloomingdale’s and beauty chain Bluemercury, he said.
Here’s how Macy’s performed against Wall Street expectations in the three-month period ended April 29, according to a Refinitiv survey of analysts:
- EPS: 56 cents adjustment Estimated 45 cents
- income: $4.98 billion vs. $5.04 billion expected
Macy’s first-quarter net income was $155 million, or 56 cents a share, compared with $286 million, or 98 cents a share, a year earlier.
Revenue fell about 7 percent to $4.98 billion from $5.35 billion a year earlier. Sales fell short of analysts’ forecasts.
Comparable owned-plus-licensed sales fell 7.2 percent in the quarter, below the 4.7 percent decline expected by analysts polled by Refinitiv.
The Macy’s brand saw the biggest year-over-year decline. On an owned-plus-licensed basis, its comparable sales fell 7.9%. At Bloomingdale’s, comparable sales on an owned-plus-franchised basis fell 4.3%. Bluemercury’s comparable sales rose 4.3% year-over-year, but the growth was slower than the double-digit or high-single-digit gains seen in other quarters.
Macy’s sales have taken a hit as customers’ budgets have been squeezed, Gennette said. About half of Macy’s eponymous brand’s customers have household incomes of $75,000 or less.
“They’re obviously under pressure, especially in our discretionary category,” he said.
At Bloomingdale’s, he said, there were also fewer “aspiring customers” who had stimulus money to buy more luxury brands during the pandemic.
The cooler weather also impacted sales as shoppers put off buying seasonal items, he added.
But Gennette said the company does see “signs of life in May” as the weather turns warmer. Spring apparel sales are up, especially at Bloomingdale’s, he said. High-end department store sales topped last May, he said.
Beauty has been one of the company’s strongest categories. Some popular pandemic items, such as textiles and home goods, also rebounded.
As Macy’s braces for a potentially tougher year, Gennette said it has a new reason for customers to visit in the fall and during the holidays. Starting in October, Nike will restore its stores and website. Macy’s received its last delivery from Nike in December 2021, as the sneaker company cuts wholesale orders and emphasizes direct-to-consumer sales.
Macy’s already sells some Nike shoes through its partnership with Finish Line, but its assortment will start to get richer.
“We paused our partnership and now we’re back,” he said.
Macy’s closed at $13.59 on Wednesday, giving it a market capitalization of $3.69 billion. Shares of the company are down 34% so far this year. That lagged the S&P 500’s nearly 9% gain and the retail-focused XRT’s nearly 6% drop over the same period.
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