Macy’s on Tuesday signaled consumers will be pickier and more price-driven in the back half of the year, even as the retailer topped Wall Street’s quarterly expectations.
The company’s shares fell about 14% on Tuesday, as the department store operator stood by its conservative full-year guidance. It expects that comparable owned-plus licensed sales will fall between 6% and 7.5% from the previous year. The retailer cut its forecast early in June. He said that the company’s own data showed rising credit card balances. Plus, he said, people are spending on experiences and preparing for the return of student loan payments this fall.
But Gennette said that the company is focused on having the items consumers are still willing to buy, such as fragrances and other beauty products.
Under Armour and
Nike merchandise is also returning to Macy’s after several years of being missing from its shelves.“We’re moving into areas of interest,” he said. He said that the company is focusing on products consumers are still willing to buy, such as fragrances and other beauty products. We’re prepared for the second half of , to react to where and when consumers shop. “Here’s how the retailer did for the fiscal second quarter that ended July 29 compared with what Wall Street expected, based on a survey of analysts by Refinitiv:
Earnings per share: 26 cents adjusted vs. 13 cents expected[of the year]Revenue: $5.13 billion vs. $5.09 billion expected
The company swung
- to a net loss of $22 million, or 8 cents per share, from net income of $275 million, or 99 cents per share a year earlier.
- Net sales fell from $5.6 billion a year earlier. Digital sales fell 10% and store sales declined 8% compared to the previous period. Macy’s, which sells many clothing items and accessories, has been hit harder by the consumer backlash than other retailers that sell staples. When the department store operator cut its full-year forecast early in the summer, it said it had seen sales weaken in the spring, even at its higher-end chains, Bloomingdale’s and beauty chain Bluemercury.
Those sales patterns largely stayed the same in recent months, Gennette said. July was a strong month compared with the rest of the quarter, but consumers’ purchases were “very value driven,” he said. Gennette added that the company has cleared through spring merchandise with markdowns and stocked up on the fresh items for the fall and holiday season. Inventory was 18% less than in 2019 and down 10% from last year. On an owned-plus licensed basis, the chain’s comparable sale fell by 8.2%. However, fragrances, prestige makeup, and tailored apparel for men were bright spots. Bloomingdale’s’ comparable sales fell 2.6% in the first quarter of this year on an owned-plus licensed basis. Shoppers bought shoes, designer and contemporary apparel for women, as well as beauty products. Sales of handbags, men’s apparel and dresses were softer in the quarter, the company said.
Bluemercury stood apart with year-over-year sales gains. Comparable sales rose 5.8% on an owned basis, as shoppers bought skin-care items and color cosmetics.
Consumers’ financial pressures also showed up on Macy’s balance sheet. The revenue from other business areas, such as credit cards, dropped by $84million year-over-year. The company said it expected credit card delinquencies to rise, but said they shot up faster than anticipated.
As Macy’s looks for ways to grow and refresh its image, it has opened up smaller stores in strip malls. The company announced on Tuesday that it would open four additional stores this fall. So far, it has rolled out 10 of them.
Gennette said that new kind of store has outperformed Macy’s legacy mall anchor locations. He said that the smaller stores which have been in business for more than one year saw sales increase during the second quarter. The company has been underperforming the market this year. The S&P 500 rose 14% in the same time period as its stock fell 39%.