Maisie Amazon.com Inc. cut its full-year sales forecast on Wednesday, as the department store operator said it was competing with more selective shoppers and more promotions.
The retailer posted a mixed quarter, beating Wall Street earnings expectations but missing revenue.
Macy's said it now expects net sales of between $22.1 billion and $22.4 billion, down from the range it previously forecasted of $22.3 billion to $22.9 billion. That would also represent a year-over-year decline from the $23.09 billion it reported for fiscal 2023.
Macy's expects comparable sales, which exclude the impact of store openings and closings, to range from a decline of about 2% to a decline of about 0.5%. It previously expected comparable sales to range from a decline of about 1% to an increase of about 1.5%. This measure includes owned and licensed sales, which include merchandise Macy's owns and items from brands that pay for space in its stores, as well as third-party Macy's online marketplace.
The new forecast range “provides the flexibility needed to address ongoing uncertainty in the consumer discretionary market,” the department store operator said in a news release.
In an interview with CNBC, CEO Tony Spring said customers aren't spending freely at all of Macy's brands — even luxury department store Bloomingdale's.
“We're seeing that there's definitely weakness, caution and a delay in conversion of purchases. People are responding to things they want, things that are higher priced, things that are new, but even the affluent consumer is not spending as much as they did a year ago,” he said.
“There’s a lot of noise out there,” he said, which distracts customers or causes them to stop spending, including high interest rates, inconsistent weather patterns and a busy news cycle.
Here's what Macy's reported for its fiscal second quarter compared to what Wall Street expected, based on an analyst survey conducted by LSEG:
Earnings per share: 53 cents adjusted vs. 30 cents expectedRevenue: $4.94 billion vs. $5.12 billion expected
Shares were down about 8% in premarket trading.
The iconic department store chain is looking to return to a more stable footing and sustainable growth. Spring announced in February that the retailer would close about 150 — or roughly a third — of its name-brand stores and invest in about 350 remaining locations. It plans to close the locations by early 2027.
It is also opening new, smaller Macy's stores in suburban malls and adding new locations for its best-performing brands, Bloomingdale's and Bluemercury.
However, Macy's results last quarter revealed its struggle to make that comeback at a time when consumers are becoming more selective about purchases — especially items that represent wants rather than needs.
Net sales were down from $5.13 billion in the year-ago period.
Macy's remained the company's weakest performing brand. Comparable sales fell 3.6% on a proprietary plus licensing basis, including third-party marketplaces.
At Bloomingdale’s, comparable sales decreased 1.4% on a proprietary plus licensing basis, including the third-party marketplace. Blue Mercury comparable sales increased 2%, marking the 14th consecutive quarter of comparable sales growth for the specialty beauty brand.
In the three months ended Aug. 3, Macy's net income was $150 million, or 53 cents a share, compared with a loss of $22 million, or 8 cents a share, in the year-ago period.
But even when excluding the weaker stores that Macy’s is closing, sales were tepid. Comparable sales for its namesake brand — which includes Macy’s stores that will remain open and online sales — fell 3.3% on an equity plus licensing basis, including the third-party marketplace.
Macy’s said it has made progress on its transformation plan, which it unveiled in February after Spring took over as CEO. At the first 50 stores that received additional investment, comparable sales rose 1 percent on an equity plus license basis. That marked a second straight quarter of positive comparable sales at those stores since the plan began.
Those 50 stores outperformed other Macy’s locations, even in hard-hit categories like handbags, Spring said. The company will share its plans to expand the strategy beyond those stores in the fourth quarter, he said, but it has already decided to increase staffing in women’s shoes and handbags at more of its locations because of customer response.
In addition to the volatile sales environment, Macy's leaders have also faced an attempt by an activist group to take the company private. Macy's said last month that its board of directors had unanimously decided to end negotiations with Arkhouse Management and Brigade Capital.
Macy’s shares closed Tuesday at $17.74, giving the company a market cap of $4.9 billion. By Tuesday’s close, the company’s stock was down about 12% so far this year. That’s less than the S&P 500’s gain of about 17% over the same period.
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