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Macy’s Q3 beats Street, ups earnings guidance; holiday inventory ‘fresh’

Macy’s third-quarter revenue was buoyed by strong sales at Bloomingdale’s and Blue Mercury.

Macy’s reported declines in its bottom and top lines but still beat expectations amid strong luxury sales and sounded a confident note as its heads into the holiday season.

The department store giant also reaffirmed its 2022 guidance for annual sales and raised its earnings outlook.

“Our Polaris strategy is working,” stated chairman and CEO Jeff Gennette said. “In the third quarter, we achieved solid top line results and a strong beat to our bottom line guidance. As a leading gifting destination with fresh inventory across the value spectrum, we are ready to meet our customers’ needs this holiday season.”

On the company's earnings call, Gennette said that sales dipped unexpectedly in mid-October and the trend continued into November, especially in areas that experienced unseasonably warm weather. He also that while the holidays are "happening," some uncertainty remains. 

"Consumers will be spending, but it is too early to tell how much they will allocate to our ordinary categories," Gennette said. "We are confident in the amount and composition of our inventory, timing of flows and marketing, but cognizant that we do not operate in a vacuum.”

Macy’s net income fell to $108 million, or $0.39 per share, for the quarter ended Oct. 29, down from $239 million, or $0.76 per share, in the year-ago period. Adjusted earnings were $0.52 per share, easily beating the $0.15 per share analysts had expected.

Net sales fell 5.2% to $5.230 billion from $5.440 billion, but still topped estimates of $5.202 billion.


Digital sales decreased 9% versus a year ago but were up 35% versus the third quarter of 2019. Brick-and-mortar sales were down 1% over last year and down 9% versus 2019.

Same-store sales fell 3.1% on an owned basis and were down 2.7% on an owned-plus-licensed basis.

“In the third quarter, we achieved solid top line results and a strong beat to our bottom line guidance.”
chairman and CEO Jeff Gennette

Gennette said that luxury continued to outperform at Macy’s Bloomingdale’s and Bluemercury divisions.  Comparable sales at Bloomingdale’s were up 5.3%, driven by strength across women’s, men’s and kid’s contemporary and dressy apparel, women’s shoes as well as luggage.  Comp sales at Blue Mercury rose 14%. (Comp sales at Macy’s fell 4.4%).

Inventory was up 4% year-over-year (compared to 7% year-over-year in the second quarter) and down 12% versus 2019. The company said it “strategically” brought in seasonal merchandise earlier to strengthen its competitive position for holiday and has the added capacity to chase in-season trends.

“We are operating from a position of strong financial health – with appropriate levels of inventory, a strong balance sheet with ample liquidity, investment grade credit metrics and fixed interest rate debt in a rising interest rate environment,” said Macy’s CFO Adrian Mitchell. “We have the tools, data-driven processes and talented teams to manage through this uncertain time and are committed to long-term, profitable growth.”

The company is now expecting full-year adjusted earnings per share of $4.07 to $4.27, up from its prior guidance of $4.00 to $4.20. It reaffirmed its sales guidance for sales of $24.340 billion to $24.580 billion.

Earlier this month, Macy’s announced it will invest a total $30 million in a program to advance entrepreneurial growth and increase investment in diverse-owned and underrepresented businesses.

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