Macy’s Inc., citing the impact of inflation, inventory gluts and changing consumer behavior, reported declines in its top and bottom lines for the second quarter and lowered its forecast for the year as a whole.
However, the company said it was winning new customers, was well-positioned to navigate an uncertain retail landscape, that luxury remained strong and that second-quarter results beat expectations.
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Net income for the quarter ended July 30 fell to $275 million, or diluted earnings per share of $0.99, from $345 million, or $1.08 per share, a year ago.
Diluted adjusted earnings per share of $1 compared to adjusted earnings per share of $1.29 in the year-ago period.
This compares to diluted earnings per share and adjusted diluted earnings per share of $0.28 in the second quarter of 2019.
Operating income fell to $399 million in the latest quarter from $597 million in the prior period.
Total sales fell to $5.6 billion from $5.65 billion; comparable sales fell 1.6% but rose 4.4% from the second quarter of 2019.
“We delivered solid results in the second quarter despite a challenging environment,” said Jeff Gennett, chairman and chief executive officer of Macy’s Inc. health and stability of our business. We believe we are well positioned to respond to changing consumer behavior. Despite inflationary pressures, consumers continued to shop at Macy’s as a source of style and a leading destination for gifts. In addition, Bloomingdale’s and Bluemercury captured demand for luxury brands, leading both brands to perform better in the quarter.
“Over the past two years, our Polaris strategy has made us faster and more nimble, which has been essential for navigating rapidly changing consumer trends and macro conditions,” Genette added. “We expect to emerge from this uncertain period in a strong position with a strong balance sheet, new opportunities and a talented team ready to capture renewed demand,” Jennett continued.
Macy’s results were in line with other major retailers reporting second-quarter declines due to inflation, inventory gluts, recession fears and the absence of last year’s stimulus, including Kohl’s Corp. and Target, although Walmart was lifted by grocery sales in the second quarter.
Macy’s inventory increased 7 percent year-over-year and decreased 8 percent from 2019, reflecting “disciplined inventory management in an environment of continued supply chain volatility,” the company said. “Where there was flexibility, the company reduced revenue to manage inventory levels in line with consumer demand. However, in certain categories, inventory levels remain elevated due to lower year-over-year sales after Father’s Day, driven by excess inventory levels across the industry and a slowdown in discretionary consumer spending.”
Digital sales were down 5 percent year-over-year, while they were up 37 percent from the second quarter of 2019.
Digital penetration was 30 percent of net sales, down 2 percentage points from the second quarter of 2021 but up 8 points from the second quarter of 2019.
By division, Macy’s comparable sales fell 2.8 percent, but Bloomingdale’s comparable sales rose 5.8 percent.
Bluemercury’s comparable sales were up 7.6 percent.
Macy’s now expects net sales for the year as a whole to be in the range of $24.34 billion to $24.58 billion, and adjusted earnings per share of $4 to $4.20.
That compares with the previous forecast of $24.46 to $24.7 billion in sales and $4.53 to $4.95 in adjusted earnings per share.