By ANNE D’INNOCENZIO and MICHELLE CHAPMAN
NEW YORK (AP) —
Macy’s profit and sales for the holiday quarter slid with inflation leading some customers to pull back, but it beat Wall Street expectations and its outlook for 2023 didn’t disappoint given the uncertain economic environment.
Major retailers in the past two weeks have told investors they don’t know what to expect in 2023 with so many questions about the strength of the U.S. and global economy.
However, Macy’s on Thursday lifted investors with a relatively positive outlook on profit for this year.
The company said it expects to earn between $3.67 and $4.11 per share, compared with analysts projections for per-share earnings of $3.78.
Shares rose almost 10% before the opening bell.
Macy’s joins a growing list of retailers feeling the sting of a consumer spending slowdown in an economic environment that’s growing more unpredictable. A number of retailers including Kohl’s, Walmart and Target all offered in the past week annual financial outlooks lower than what analysts expected.
While inflation in recent months has eased, it still remains stubbornly high, weighing on Americans. Part of the reason inflationary pressures have eased, at least for some things, is a campaign by the Federal Reserve to cool spending, and the economy. Those efforts make using credit cards more expensive, which can negatively impact retailers.
Macy’s said Thursday that it “anticipates that the heightened level of uncertainty within the macroeconomic environment will continue” this year.
In early January, Macy’s had tempered its sales outlook for the fiscal fourth quarter after shoppers spent less than expected during the lull between Thanksgiving weekend and the final days before Christmas. It said at the time that shoppers will remain under financial pressure, particularly in the first half of 2023 and had planned inventory accordingly.
Macy’s earned $508 million, or $1.83 per share, in the quarter ended Jan. 28. Stripping out certain items, its earnings were $1.88 per share. That tops the per-share earnings of $1.57 that Wall Street had expected, according to a survey by Zacks Investment Research.
The results compare with net income of $742 million, or an adjusted profit of $2.45 per share, in the year-ago period.
“Although Macy’s expects challenges in the year ahead (with an net sales decline of 1% to 3% in the fiscal year ahead), its better-than-expected Q4 results bode well as they demonstrate that the myriad changes it has been making over the past few years, such as shifting its store mix away from malls, have begun to pay dividends,” Insider Intelligence senior analyst Zak Stambor said in a statement.
Sales declined to $8.26 billion from $8.67 billion, but that also topped analyst projections. Macy’s Inc. it expects sales of $23.7 billion to $24.2 billion for 2023, which is on the lighters side compared with analyst projections.
Comparable sales dropped 3.3% on an owned basis and were down 2.7% on an owned-plus-licensed basis.
“We were competitive but measured in our promotions, took strategic markdowns and intentionally did not chase unprofitable sales,” Chairman and CEO Jeff Gennette said in a prepared statement.
