Macy’s (NYSE:M), the iconic department store, has released its third-quarter financial results, showcasing resilience amid consumer caution about spending. While overall sales declined by 7% to $4.86 billion, both sales and profits exceeded Wall Street expectations, prompting a surge of over 10% in shares before Thursday’s market opening. The company also raised the top end of its full-year revenue and adjusted profit forecasts.
Despite a 7% drop in overall sales, beating analysts’ expectations, traditional and online sales both witnessed a similar decline. Same-store sales, a crucial measure of retail health, fell by 7.6% for Macy’s and 3.2% for Bloomingdale’s. The challenging economic environment, marked by rising prices and increased credit costs, has impacted consumer spending.
Macy’s reported quarterly earnings of $43 million, or 15 cents per share, a decrease from $108 million, or 39 cents per share, in the same period last year. Adjusted earnings, excluding certain items, stood at 21 cents per share, surpassing Wall Street’s breakeven expectations.
Chairman and CEO Jeff Gennette expressed optimism, stating, “We delivered better-than-expected top and bottom line third quarter results and are entering the holiday period in a healthy inventory position.”
The broader retail landscape has seen mixed results, with Walmart posting better-than-expected third-quarter results, driven by low prices attracting budget-conscious shoppers. However, a muted outlook led to a decline in Walmart’s shares. Target also reported better-than-expected profits, but sales slid as consumers exercised caution with their spending.
Despite the challenging market conditions, Macy’s revised its full-year revenue forecast to a range between $22.9 billion and $23.2 billion, up from the previous outlook of $22.8 billion to $23.2 billion. The company now anticipates adjusted earnings in the range of $2.88 to $3.13 per share, compared to the earlier prediction of $2.70 to $3.20 per share.
In a strategic move, Macy’s plans to accelerate the expansion of its small-format stores, aiming to add up to 30 new locations by the fall of 2025. This initiative aligns with the company’s commitment to providing shoppers with more convenient locations and is part of the ongoing efforts to adapt to evolving consumer preferences.
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