Macy’s The department store operator cut its full-year sales forecast on Wednesday as it contended with select shoppers and heavy promotions.
The retailer posted a mixed quarter as it topped Wall Street’s revenue expectations but missed revenue.
It now expects net sales of between $22.1 billion and $22.4 billion, down from a previously expected range of $22.3 billion to $22.9 billion. This would be a year-over-year decline from the $23.09 billion reported in fiscal 2023.
Macy’s expects comparable sales, which take out the impact of store openings and closings, to decline about 2% to 0.5%. It had previously expected comparable sales to range from around a 1% decline to a 1.5% gain. That measure includes owned and licensed sales, which includes Macy’s third-party online marketplace as well as items from brands that pay for space inside its stores.
The department store operator said in a news release that the new Outlook range “provides flexibility to address uncertainty in the volatile consumer market”.
In an interview with CNBC, CEO Tony Spring said customers don’t spend freely even at Macy’s brands — including upscale department store Bloomingdale’s.
“We’re definitely seeing a softness, a caution, a delay in changing procurement,” he said. “And people are responding to things they want, things that are sharply priced, fresh, but even affluent consumers aren’t spending as much as they were a year ago.”
Here’s what Macy’s reported for the fiscal second quarter compared to what Wall Street expected, based on LSEG’s survey of analysts:
- Earnings per share: 53 cents adjusted vs. 30 cents expected
- Revenue: $4.94 billion and $5.12 billion expected
Shares fell about 8% in premarket trading.
The iconic department store is poised to regain stability and steady growth. Spring announced in February that the retailer would close about 150 of its namesake stores, or nearly a third, and invest in the remaining 350 locations. It plans to close the locations in early 2027.
It is opening new, smaller Macy’s stores in suburban strip malls and adding new locations of its best-performing brands Bloomingdale’s and Bluemercury.
Still, Macy’s results in the latest quarter revealed its struggles to rebound at a time when consumers are becoming more selective about purchases — especially items that are wants rather than needs.
Net sales were down from $5.13 billion in the prior-year period.
The eponymous Macy’s brand continued to be the company’s weakest performer. Comparable sales on an owned-plus-license basis, including the third-party market, fell 3.6%.
At Bloomingdale’s, comparable sales on an owned and licensed basis, including the third-party market, decreased 1.4%. Comparable sales for BlueMercury rose 2%, marking the beauty brand’s 14th straight quarter of comparable sales growth.
For the three months ended Aug. 3, Macy’s reported net income of $150 million, or 53 cents per share, compared with a loss of $22 million, or 8 cents per share, in the year-earlier period.
Macy’s stressed that it has made progress on its turnaround plan, which it unveiled in February after Spring stepped into the company’s key role. Comparable sales increased 1% on an owned-plus-licensed basis, driven by additional investment in its top 50 stores. It marked the second consecutive quarter of positive comparable sales at those stores since the program began.
Even though Macy’s avoided weak stores that were closing, sales were sluggish. Comparable sales for its Go-Forward namesake brand — which includes Macy’s stores that remain open and online sales — declined 3.3% on an owned-plus-licensed basis, including the third-party market.
Along with a chaotic sales environment, Macy’s leaders also faced an activist group’s attempt to take the company private. Macy’s said last month that its board had unanimously decided to end negotiations with Arkhouse Management and Brigade Capital.
Shares of Macy’s closed Tuesday at $17.74, bringing the company’s market value to $4.9 billion. As of Tuesday’s close, the company’s stock is down about 12% so far this year. That’s behind the S&P 500’s roughly 17% gains over the same period.
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