Macy’s warns that gross sales will come to mild within the vacation quarter

Macy’s flagship store in Herald Square in New York, December 23, 2021.

Scott Mill | CNBC

Macy’s on Friday, the company warned that sales will be lighter in the holiday quarter, saying consumer budgets are under pressure and it expects that pressure to continue this year.

The department store operator said net sales are now expected to come in at the low-to-mid point of its previously expected range of $8.16 billion to $8.4 billion. Adjusted diluted earnings per share are expected to be in the previously reported range of $1.47 to $1.67.

For the same period last year, Macy’s reported revenue of $8.67 billion and adjusted earnings per share of $2.45.

Shares of the company fell more than 4% in aftermarket trading on Friday.

Macy’s is the latest retailer to offer consumer cues as investors await holiday results and look for signs of whether demand will hold up amid persistently high inflation.

CEO Jeff Gennette said Macy’s had strong Black Friday and Cyber ​​Monday sales and saw strength in giftware and occasionwear, but “off-peak holiday week breaks were deeper than expected.”

He said in a press release that the retailer, which owns high-end department store chain Bloomingdale’s and beauty chain Bluemercury, was taking action to prepare for what could be a tougher year. For example, he said, it has managed its inventory closely so it can remain agile and have the merchandise customers want.

Bloomingdale’s and Bluemercury have outperformed the rest of the business, Gennette said, and the company expects gross margins for the holiday season to be about in line with expectations.

Total quarter-end inventories are on track to be slightly down year-on-year and down by the mid-teens compared to 2019, Macy’s said.

Gennette said it uses customer data when ordering inventory to select the goods to sell and caters to customers looking for fashion items as well as value.

However, the retailer expects a tougher selling environment, Gennette said.

“Based on current macroeconomic indicators and our proprietary credit card data, we believe consumer pressure will continue into 2023, particularly in the first half, and have planned inventory mix and depth of initial purchases accordingly.”

Macy’s previewed fourth-quarter expectations ahead of the ICR meeting. Gennette, Macy’s Chief Financial Officer Adrian Mitchell and Chief Merchandising Officer Nata Dvir will attend next week’s investor conference.

The company will report its results for the holiday quarter and full fiscal year in early March.

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