Macy's (M) shares slumped lower Thursday after the struggling retailer slashed its full-year profit forecast amid what it called 'weakened demand trends' heading into the summer months.
Macy's said adjusted earnings for the three months ending in April, the group's fiscal first quarter, came in at 56 cents share, down more than 42% from the same period last year but well ahead of the Street consensus forecast of 45 cents share. Group net sales, Macy's said fell 6.9% to $4.98 billion, missing analysts' estimates of a $5.04 billion tally, while same-store sales were down 7.9%.
Looking into the 2023 financial year, Macy's said it sees net sales in the region of $22.8 billion to $23.2 billion, down from a prior forecast of $23.7 billion to $24.2 billion. Adjusted earnings, the group said, will likely come between $2.70 to $3.20 per share, down from its early-year forecast of between $3.67 and $4.11 per share.
“During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, strength of our inventory management and operational efficiencies," said CEO Jeff Gennette. "We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories.".
“We have moved quickly to take the appropriate actions to meet current consumer demand and manage our expenses," he added. "Our revised guidance reflects incremental clearance markdowns to address excess spring seasonal merchandise in the second quarter, along with adjustments to the category composition and inventory levels in the back half of the year."
Macy's shares were marked 4.8% lower in early trading immediately following the earnings release to change hands at $12.91 each.
Macy's upscale rival, Nordstrom JWN, posted a surprise first quarter profit late Wednesday, that countered concerns for a broader spending slowdown amid stubbornly high inflation and rising interest rates.
Nordstrom said its adjusted profit for the three months ending in April, the group's fiscal first quarter, were pegged at 7 cents per share, up from a loss of 6 cents per share last year and besting the Street's forecast of another 8 cent loss. Group revenues, Nordstrom said, fell 11% to 3.57 billion, but came in well ahead of analysts' estimates of a $3.12 billion tally
The group held to its prior forecast of a decline of between 4% and 6% for overall revenues, compared to 2022 levels, with adjusted profit margins rising to between 3.7% and 4.2% compared to the 3.3% level recorded in 2022.
"As we've seen since June of last year, customer demand continued to be pressured given the current macroeconomic backdrop, which impacted our top-line results across both banners," CEO Erik Nordstrom told investors on a conference call late Wednesday. "By comparison, the first quarter of 2022 benefited from a strong pent-up demand for a return to occasions as the pandemic receded."
"As a result, our year-over-year sales comparisons for Q1 were difficult, but those comparisons get progressively easier as we proceed through the year," he added. "Given the uncertain macro environment, we remain focused on executing with agility."
Nordstrom shares were marked 6.33% higher at $16.29 each..
