Macy’s warns holiday quarter sales will come to light

Macy’s warned on Friday that holiday quarter sales will come in on the lighter side, saying that consumers̵[ads1]7; budgets are under pressure and that they expect the pressure to continue into the year.

The department store operator said net sales are now expected to be at the low to mid-point of the 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.

A year ago, Macy’s reported revenue of $8.67 billion and adjusted earnings per share of $2.45.

Shares in the company fell around 4% in after-market trading on Friday.

Macy’s is the latest retailer to provide clues about the consumer, as investors await holiday results and look for signs of demand holding up as inflation remains high.

CEO Jeff Gennette said Macy’s delivered strong Black Friday and Cyber ​​Monday sales and saw strength in gifting and occasion wear, but “the breaks in the off-peak holiday weeks were deeper than expected.”

He said in a news release that the retailer, which includes department store chain Bloomingdale’s and beauty chain Bluemercury, has taken steps to prepare for what could be a tougher year. For example, he said, it has carefully managed its inventory so it can stay nimble and have the items customers want.

Bloomingdale’s and Bluemercury outperformed the rest of the business, Gennette said, and the company expects gross margins for the holiday season to be roughly in line with expectations.

Total inventories at the end of the quarter are on track to be slightly below last year and down in mid-2019 compared to 2019, Macy’s said.

As it orders inventory, Gennette said it uses customer data to select items that will sell and cater to customers seeking fashion and value.

But the retailer expects a more challenging sales environment going forward, Gennette said.

“Based on current macroeconomic indicators and our proprietary credit card data, we believe the consumer will continue to be under pressure in 2023, particularly in the first half of the year, and have planned inventory mix and the depth of initial purchases accordingly.”

Macy’s shared a preview of its fourth quarter expectations ahead of the ICR conference. Gennette, Macy’s Chief Financial Officer Adrian Mitchell and Chief Merchandising Officer Nata Dvir will attend the investor conference next week.

The company will report its results for the holiday quarter and the full financial year in early March.