Macy’s warns that holiday season sales will come to light
Macy’s flagship store in Herald Square in New York, December 23, 2021.
Scott Mlyn | CNBC
Macy’s at on Friday it warned that its holiday season sales will come in on the lighter side, saying that consumer budgets are under pressure and that it expects that crisis to continue into this year .
The department store operator said net sales are now expected to be in the low to mid-range 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.
For the prior year, Macy’s reported revenue of $8.67 billion and adjusted earnings per share of $2.45.
The company’s shares fell about 4% in aftermarket trading on Friday.
Macy’s is the latest retailer to issue hints about the consumer, as investors await holiday results and look for signs that demand is holding up as inflation still high.
CEO Jeff Gennette said Macy’s posted strong Black Friday and Cyber Monday sales and saw strength in gift and occasion apparel, but “the lure of the lower holiday weeks was deeper.” than expected.”
He said in a news release that the retailer, which includes upscale department store chain Bloomingdale’s and beauty chain Bluemercury, has taken steps to prepare for a year that could be harder. For example, he said, he has closely managed his inventory so he can stay flexible and have the products customers want.
Bloomingdale’s and Bluemercury outperformed the rest of the industry, Gennette said, and the company expects gross margins for the holiday season to be roughly in line with expectations.
All end-of-season inventories are expected to be slightly lower than last year and down in the mid-teens compared to 2019, Macy’s said.
While ordering inventory, Gennette said he uses customer data to select products that will sell and meet customers looking for fashion and value.
But the retailer expects a more challenging retail environment ahead, 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, and we have increased inventory mix and initial purchase depth designed accordingly.”
Macy’s shared a preview of fourth-quarter expectations ahead of the ICR Conference. Gennette, Macy’s Chief Financial Officer Adrian Mitchell and Chief Merchandising Officer Nata Dvir will participate in the investor conference next week.
The company will report its holiday quarter and full fiscal year results in early March.