Macy’s is going into the holidays heavily, raising guidance for 2022

NEW YORK – Macy’s profits and sales slumped in the third quarter as the department store had to increase its discounts amid a retreat from inflation-stricken shoppers.

Still, it beat Wall Street expectations, and the New York company raised its earnings outlook, in part on better credit card earnings. Shares are up nearly 7% ahead of Thursday’s opening bell.

“Retail is detail, and our talented and agile team does a great job to keep up,” Macy’s CEO Jeff Gennette said in a statement. “We know that the consumer is under increasing pressure and has choices about where to spend money. “

Gennette noted that Macy’s attracts shoppers because it offers fresh fashion items that appeal to shoppers looking for good prices. Its upscale business, Bloomingdale’s, has also done well as wealthy shoppers haven’t backed out.

Macy’s reported net income of $108 million, or 39 cents a share, for the three-month period ended October 29. That compares to $239 million, or 76 cents a share, in the prior-year period. Adjusted earnings came in at 52 cents per share, well beating the 18 cents per share Wall Street had been expecting, according to a poll by FactSet.

Revenue fell 3.9% to $5.23 billion from $5.44 billion in the year-ago period, but that, too, beat expectations.

Comparable sales — those from established stores and online — were down 2.7% year-over-year, including licensed stores, but were up 6% compared to the third quarter of 2019 before the pandemic.

Online sales fell 9% compared to Q3 2021 but increased 35% compared to Q3 2019.

Macy’s took a hit early in the pandemic when it was forced to close its stores for a few months, but sales rebounded in 2021 as Americans began redecorating homes or buying casual wear while staying close to home .

But Americans have moved dramatically away from pandemic-related spending as the virus has subsided, and that has left a number of retailers with excess inventory unable to sell and therefore forced to discount. Rising prices for groceries and rent have also diverted spending to necessities like groceries and gas, hurting businesses like Macy’s.

In August, Macy’s said it had cut orders where it could to better synchronize with customer demand, but inventories in some categories remained high. It has also lowered prices to clear inventory.

Rival department store Kohl’s also reported third-quarter earnings and shares fell 4%, despite beating expectations after withdrawing guidance for the year.

Away from the sale, there’s a lot going on at the Menomonee Falls, Wisconsin-based retailer. CEO Michelle Gass said she will take over the top job at The Gap this month. There was also strong pressure from major stakeholders in the company to make leadership changes.

Kohl’s board has formed a search committee to find a new CEO. Director Tom Kingsbury acts as interim CEO.


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Sarah Y. Kim

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