Are Macy’s Earnings a Warning to Other Retailers?

By Chris Lange Updated Jan 30, 5:24PM EST · Published Aug 14, 8:55AM EDT

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Are Macy’s Earnings a Warning to Other Retailers? — © Mike Kalasnik from Fort Mill, USA / Wikimedia Commons

Macy’s Inc. (NYSE: M | M Price Prediction) reported its most recent quarterly results before the markets opened on Wednesday. The retailer said that it had $0.28 in earnings per share (EPS) and $5.55 billion in revenue, compared with consensus estimates that called for $0.45 in EPS and $5.55 billion in revenue. The fiscal second quarter of last year reportedly had $0.70 in EPS and $5.57 billion in revenue.

During the latest quarter, comparable sales growth was 0.2% on an owned basis and 0.3% on an owned plus licensed basis.

The retailer had a slow start to the quarter and finished below its expectations. Rising inventory levels became a challenge based on a combination of factors: a fashion miss in key women’s sportswear private brands, slow sell-through of warm weather apparel and the accelerated decline in international tourism.

While Macy’s had seasonal inventory challenges in spring, there are many areas of the business that performed well, notably its Destination Businesses. Also, the digital business posted its fortieth consecutive quarter of double-digit growth and mobile remained Macy’s fastest-growing channel.

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Looking ahead to the 2019 fiscal full year, the company expects to see EPS in the range of $2.85 to $3.05 with comparable sales flat to up 1%. Consensus estimates call for $3.07 in EPS and $24.89 billion in revenue for the year.

Jeff Gennette, Macy’s board chair and chief executive, commented:

Our 2019 strategic initiatives are on track to contribute to sales growth in the back half of the year, and we have plans to drive productivity and improve gross margins. Our team has responded quickly to the external environment, course corrected when needed and we remain confident. Our 130,000 colleagues compete every day to win our customers’ business.

Shares of Macy’s closed Tuesday at $19.36, in a 52-week range of $18.86 to $39.30. The consensus price target is $23.00. Following the announcement, the stock was down nearly 13% at $16.90 in early trading indications Wednesday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.