Macy’s warns of light holiday sales; consumer to be ‘pressured’ in 2023
Macy’s Inc. said its holiday sales will come in at the low end or middle of its guidance and struck a cautious note with regards to 2023.
In a fourth-quarter update ahead of the ICR Conference, CEO and chairman Jeff Gennette said that Macy’s Black Friday/Cyber Monday sales were in line with company expectations, and the week leading up to and the one following Christmas were ahead. But the department store retailer had deeper-than-expected lulls during nonpeak periods in December.
“Our teams executed well during a competitive holiday season,” Gennette stated. “In an environment when discretionary spending was under pressure, we operated with precision and agility. However, the lulls of the non-peak holiday weeks were deeper than anticipated.”
Macy’s occasion apparel and gift-giving business were strengths, Gennette noted, and its Bloomingdale’s and Bluemercury divisions continued to outperform throughout the season.
“Across nameplates, we stayed close to our customer, utilizing data and analytics tools to respond to shifts in demand,” he added. “This has contributed to clean inventories and an expected gross margin rate roughly in line with previously issued fourth quarter guidance.”
On a percentage basis, Macy’s total end-of-quarter inventories are on track to be slightly below last year and down mid-teens relative to 2019.
Citing current macro-economic indicators and its proprietary credit card data, Macy’s anticipates a challenging sales environment going forward.
“We believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly,” Gennette stated. “We take a balanced approach to merchandise receipts and remain committed to offering fashion and value across nameplates and channels, with the capacity to adjust in-season buys and chase into areas of strength.
The department store operator said its fourth-quarter net sales are now expected to be at the low- to midpoint of its previously expected range of $8.16 billion to $8.4 billion. It expects adjusted diluted earnings per share to be in the previously issued range of $1.47 to $1.67. (Macy’s fourth quarter ends Jan. 28, with the company reporting its quarterly and full fiscal-year results in March.)
Last week, Macy’s confirmed the locations of four full-line mall stores it is closing in January as part of its ongoing strategy to close select stores while it expands its off-mall, smaller-format store concepts.