Macy’s swings to loss in Q2
Macy’s Inc. went into the red amid falling sales in the second quarter of fiscal 2023.
The department store retailer reported a net loss of $22 million, compared to net income of $275 million in the second quarter of fiscal 2022. Diluted loss per share was $0.08, compared to diluted earnings per share of $0.99 a year earlier.
Sales declined 8.4% to $5.13 billion from $5.6 billion. Comparable sales were down 8.2% on an owned basis and down 7.3% on an owned-plus-licensed basis. Comp sales fell 8.2% at Macy’s, and were down 2.6% at Bloomingdale’s they fell 2.6%. Comp sales rose 5.8% at Bluemercury.
Digital sales decreased 10% compared with the year-ago period.
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Jeff Gennette, chairman and chief executive officer of Macy’s, cited the need to move inventory in explaining the company’s performance.
“In the second quarter, we delivered better-than-expected top and bottom-line results,” said Gennette. “Our teams surgically implemented clearance markdowns and promotions to effectively clear spring seasonal receipts and ensure fresh assortments for the fall and Holiday seasons.”
2023 guidance
Looking ahead, Macy’s said in light of ongoing macroeconomic pressures and uncertainty, it continues to take a cautious approach on the consumer. The company is reaffirming its annual sales and earnings outlook. Better-than-expected second quarter gross margin, SG&A and interest expense, and a lower annual share count, are expected to fully offset reduced annual credit card revenue and asset sale gain assumptions.
The company says its annual shortage assumption has not materially changed from the prior outlook and remains elevated compared to recent historical levels. Consistent with the company’s prior outlook, its earnings outlook includes the benefit of an incremental $200 million of cost savings identified as part of ongoing expense management.
Macy’s is reaffirming its guidance for full-year fiscal 2023. This includes net sales of $22.8 billion to $23.2 billion and adjusted diluted earnings per share of $2.70 to $3.20.
“We continue to see uncertainty in the macroeconomic environment. We are leveraging our robust data science tools to refine inventory composition, while reading and reacting to shifting consumer preferences to meet demand,” said Gennette. “Looking ahead, we are committed to fortifying our core business and improving our customer experience while investing in our five growth vectors. We believe these advancements, enabled by our strong talent, will drive our relevancy and long-term success as a modern department store.”