Macy's third-quarter sales fell 7.1% to $4.86 billion.
Macy’s reported a better-than-expected third quarter as improvements in gross margins and merchandise inventory helped offset declining sales.
The department store giant also sounded an optimistic note about the holiday season.
“We delivered better-than-expected top and bottom line third quarter results and are entering the holiday period in a healthy inventory position,” said chairman and CEO Jeff Gennette. “We have refined our gift assortment, simplified our promotions and improved our shopping experience.”
After 40 years with the company, Gennette is set to retire from Macy’s in February, turning over the reins to Tony Spring, CEO of Bloomingdale’s.
"Looking forward we have strong continuity with Tony Spring transitioning to CEO in February and I am confident he and our leadership team will guide Macy’s, Inc. to sustainable long-term profitable sales growth in the future,” Gennette said.
The company reported that its net income fell to $43 million, or $0.15 a share, for the quarter ended Oct. 28, from $108 million, or $0.39 a share, in the year-ago period. Adjusted earnings per share came to $0. 21, way in front of Street breakeven estimates.
Sales fell 7.1% to $4.86 billion, ahead of estimates of $4.78 billion. Digital sales decreased 7%.
Same-store sales were down 7.0%. Same-store sales fell 7.6% at Macy’s and were down 3.2% at Bloomingdale’s. Comp sales rose 2.5% at Bluemercury.
The retailer’s gross margin improved, rising to 40.3% from 38.7%, due to lower permanent markdowns within the Macy’s brand and improved freight expense. Merchandise inventories fell 5.9% to $6.03 billion.
In October, Macy’s said that it plannned to open up to 30 smaller-format stores through fall 2025. Located in off-mall shopping centers, the stores are are about one-fifth the size of a full-line Macy’s, which average from 180,000 sq. ft. to 200,000 sq. ft.
For fiscal 2023, Macy’s raised its sales outlook to between $22.9 billion and $23.2 billion, up from its previous range of $22.8 billion to $23.2 billion. It now expects adjusted earnings guidance range to between $2.88 and $3.13 a share from $2.70 to $3.20.