Macy’s Misses Forecasts During Week of Department Store Woes
Macy’s Inc. earnings disappointed Aug. 14, when the retail giant missed Wall Street forecasts and lowered its earnings-per-share guidance for fiscal 2019.
Fashion misses and tariffs were blamed for slow sales during the second quarter of the Cincinnati, Ohio–headquartered Macy’s 2019 fiscal year. For this quarter, the prominent department store reported an uptick of 0.3 percent in its same-store sales. The company’s net sales for the quarter were more than $5.5 billion, while it reaffirmed its previously provided annual sales guidance, which will range from flat to 1 percent.
However, the retailer lowered its diluted EPS by $.20, to a guidance of $2.85 to $3.05, said Jeff Gennette, Macy’s Inc.’s chairman and chief executive officer. Macy’s stores stumbled because of a slow start to the quarter, which caused the company to finish below expectations.
“Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women’s sportswear private brands, slow sell-through of warm-weather apparel and the accelerated decline in international tourism,” he said. “We took markdowns to clear the excess Spring inventory and are entering the Fall season with the right inventory to meet anticipated customer demand.”
There was a bit of good news, too. Macy’s digital business posted its 40th consecutive quarter of double-digit growth, he said.
The expansion of Macy’s off-price Backstage stores is also contributing to good sales in the company’s bricks-and-mortar locations.
The news came at a tough time for the department-store market. Influential department-store Barneys New York filed for Chapter 11 bankruptcy on Aug. 6. On Aug. 15, Plano, Texas–based J. C. Penney Company Inc. announced results for its second quarter of its 2019 fiscal year. Same-store sales declined 9 percent. Jill Soltau, J. C. Penney’s chief executive officer, pledged to revive the retail giant.
“We are laser-focused on two parallel paths,” she said in a statement. “One is building a framework to reestablish the practices needed to strengthen the day-to-day operations of our business. Concurrently, we are developing differentiating, transformational initiatives. The journey we are on will restore health back to our company.”
While department stores are suffering, the U.S. Department of Commerce reported an uptick in retail trade sales for the month of July. On Aug. 15, it reported that July retail trade sales increased 0.6 percent from June 2019 and 3.4 percent compared to the same time the previous year.