Key Takeaways
- Macy’s missed second-quarter revenue and comparable store sales estimates as the retailer faced a tough consumer environment.
- The biggest U.S. department store chain operator also lowered its guidance because of the drop in sales and the need for more promotions.
- Macy’s shares tumbled on the news.
Macy’s (M) shares slumped Wednesday after the retailer’s second-quarter sales declined and it lowered its full-year guidance on weak consumer spending and more promotions.
The biggest U.S. department store chain operator reported quarterly revenue fell 3.8% year-over-year to $4.94 billion, missing consensus estimates of analysts polled by Visible Alpha. Comparable store sales dropped 4.0% for owned locations and 3.3% on an owned-plus-licensed-plus-marketplace basis, also missing estimates. Adjusted earnings per share (EPS) of $0.53 was better than forecasts.
Sales at its Macy’s stores tumbled 4.4% and they fell 0.2% at Bloomingdale’s, while Bluemercury sales increased 1.7%. Merchandise inventories were up 6.0%, higher than the company expected. It blamed that on the soft sales and “the decision to invest into areas of strength for the second half of 2024.”
Chief Executive Officer (CEO) Tony Spring explained that Macy’s faced a “challenging consumer environment,” but said the retailer exhibited “effective expense control throughout the organization.” The company’s selling, general and administrative (SG&A) costs fell by $7 million to $2.0 billion.
Macy’s Lowers FY Sales Outlook Amid ‘More Discriminating’ Consumers
Macy’s noted that it updated its outlook because of a “more discriminating consumer and heightened promotional environment relative to its prior expectations.” The retailer now sees full-year net sales of $21.2 billion to $22.4 billion, down from the previous $22.3 billion to $22.9 billion. It anticipates adjusted EPS to be unchanged from the earlier $2.55 to $2.90.
Shares of Macy’s sank 13% to $15.39 about 30 minutes after the opening bell Wednesday. They have lost nearly a quarter of their value year-to-date.