Anticipated to release its second-quarter fiscal 2023 results on August 22, prior to the market’s opening bell, Macy’s, Inc. (NYSE:M) is expected to reveal declines in both its top and bottom-line figures compared to the same period last year. The Zacks Consensus Estimate projects revenues of $5,057 million, signifying a 9.7% decrease from the figures reported in the corresponding quarter of the prior year.
Over the past month, the consensus estimate for quarterly earnings has seen a slight uptick to 13 cents per share. However, this consensus mark indicates a substantial 87% drop from the earnings of $1 per share recorded in the same quarter of the previous year. Macy’s impressive performance in the last reported quarter, where it exceeded the Zacks Consensus Estimate by 21.7%, adds to the anticipation surrounding this upcoming report. On average, Macy’s has surprised with a 58.2% earnings beat over the last four quarters.
Factors to Take into Account
The performance of Macy’s in the second quarter of fiscal 2023 is expected to be influenced by factors such as subdued consumer demand due to inflationary pressures and broader macroeconomic challenges. Efforts to manage inventory levels through markdowns within specific categories and the potential for heightened promotional activities are likely to have impacted both margins and the bottom line. These vulnerabilities, combined with an increase in selling, general, and administrative expenses, are expected to have had a negative effect on the company’s performance during the reviewed quarter.
In the previous earnings call, the management projected net sales to range from $5 billion to $5.1 billion, with the gross margin not declining by more than 100 basis points year over year for the fiscal second quarter. The guidance also indicated expected adjusted earnings per share of 10 to 15 cents for the same quarter. The management acknowledged that the second quarter might experience a decline in the gross margin rate on a year-over-year basis. A decrease of 90 basis points in the gross margin is expected for the quarter under review.
Despite these challenges, Macy’s is likely to have found support in its effective execution of the Polaris strategy, robust omnichannel capabilities, thoughtfully curated merchandise assortment, and customer-centric initiatives, all aimed at delivering a seamless shopping experience. These factors could potentially soften the impact of the quarter’s challenges on Macy’s performance.
Conclusion
Zack’s dependable analysis suggests that Macy’s is likely to exceed earnings expectations on this occasion. The promising alignment of a positive Earnings ESP alongside a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) enhances the probability of outperforming earnings projections.
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