Macy’s cut its full-year sales forecast on Wednesday, as the department store operator said it was facing selective shoppers and more promotions.
The retailer posted a mixed quarter, beating Wall Street earnings expectations but missing on revenue.
Macy’s said it now expects net sales of $22.1 billion to $22.4 billion, down from the $22.3 billion to $22.9 billion it previously expected. That would also be down from the year-ago figure of $23.09 billion it reported in 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%. The company previously expected comparable sales to range from a decline of about 1% to a rise of 1.5%. That metric includes Macy’s owned and licensed sales, which include merchandise owned by Macy’s and items from brands that pay for space in the company’s stores, along with Macy’s third-party online marketplace.
The department store operator said in a press 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 no longer spending freely across all of Macy’s brands — even at high-end department store chain Bloomingdale’s.
“We see that there is definitely a softness, a caution, a delay in purchasing,” he said. “And people are responding to things they want, things that are high-priced, to newness, but even affluent consumers are not spending the same as they did a year ago.”
Here’s how Macy’s reported its second-quarter results compared to Wall Street expectations, based on a survey of analysts by LSEG:
- Earnings per share: 53 cents adjusted vs 30 cents expected
- Revenue: $4.94 billion vs. $5.12 billion expected
Shares fell about 8% in premarket trading.
The iconic department store is working to get back on solid footing and grow sustainably. Spring announced in February that the retailer would closing about 150 – or nearly a third – of its namesake stores and invest in the remaining 350 locations. The company plans to close these locations by early 2027.
It is also opening up new things, smaller Macy’s stores in suburban shopping centers And add new location Among the brands that performed better were Bloomingdale’s and Bluemercury.
But Macy’s recent quarterly results show the company is struggling to make that comeback at a time when consumers are becoming more selective about what they buy — especially when it comes to items they want rather than items they need.
Net sales fell from $5.13 billion in the same period last year.
The namesake Macy’s brand continued to be the company’s weakest performer, with comparable sales down 3.6% on an owned-plus-licensed basis, including third-party markets.
At Bloomingdale’s, comparable sales fell 1.4% on an owned-plus-licensed basis, including third-party marketplaces. And Bluemercury’s comparable sales rose 2%, marking the beauty brand’s 14th consecutive quarter of comparable sales growth.
For the quarter ended Aug. 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 stressed that it has made progress on its turnaround plan, which it was announced in February right after spring step into the top role of the company. At the first 50 stores receiving additional investment, comparable sales increased 1% on an owned-plus-licensed basis. This was the second consecutive quarter of positive comparable sales at those stores since the plan began.
Still, even excluding the weaker stores Macy’s is closing, sales were still lackluster. Comparable sales for the company’s continuing namesake brand — which includes Macy’s stores that remain open and online sales — fell 3.3% on an owned-plus-licensed basis, including third-party marketplaces.
Along with the volatile sales environment, Macy’s leaders also face an activist group’s effort to take the company private. Macy’s said last month that its board of directors had unanimously approved decision to terminate negotiations with Arkhouse Management and Brigade Capital.
Macy’s shares closed Tuesday at $17.74, giving the company a market capitalization of $4.9 billion. As of Tuesday’s close, the company’s stock was down about 12% this year. That’s worse than the S&P 500’s roughly 17% gain over the same period.
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