Macy’s Inc. reported its profit and sales beat expectations thanks to better inventory management but said the effect of a consumer slowdown in spending, as months of rising prices and higher costs of credit are starting to show.

Macy’s is “entering the holiday period in a healthy inventory position,” chief executive officer Jeff Gennette said in a statement.

The company has indicated that efforts to reduce inventory which was down 6% from the peak levels of 2022 and down 17% versus 2019 are now starting to take form, ahead of the holiday shopping season.

Alongside economic challenges such as the resuming of student-loan payments and increased interest rates, Macy’s Inc is also dealing with a broader shift away from traditional department store spending towards speciality and off-mall retail.

The company experienced a 7% decline in brick-and-mortar sales and a 7% decrease in digital sales compared to the third quarter of 2022.

The company’s namesake brand, Macy’s reported comparable sales falling by 7.6% on an owned basis and by 6.7% on an owned-plus-licensed basis.

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By GlobalData

Bloomingdale’s saw a 3.2% decrease in comparable sales on an owned basis and a 4.4% decrease on an owned-plus-licensed basis.

On the other hand, Mayc’s Inc’s other upscale brand Bluemercury reported an increase in comparable sales by 2.5% on an owned basis.

Macy’s Inc. noted that women’s contemporary apparel and shoes were its top-performing categories, while men’s, home, and designer handbags were more challenged.

Highlights from Macy’s Q3 results:

  • Net sales of $4.9bn, down 7% versus the third quarter of 2022,
  • Operating income was lower at $86m compared to $192m last year,
  • Net income declined to $43m from $108m the year before.

For the full year, the company now foresees full-year revenue between $22.9bn and $23.2bn.

Macy’s Inc. now expects comparable sales to decline between 6% and 7% on an owned and licensed basis, and narrowed its adjusted earnings guidance to $2.88 to $3.13 a share.

“We delivered better-than-expected top and bottom line third-quarter results and are entering the holiday period in a healthy inventory position,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc.

“Looking forward we have strong continuity with Tony Spring transitioning to CEO in February and I am confident he and our leadership team will guide Macy’s, Inc. to sustainable long-term profitable sales growth in the future.”

Macy’s Inc. announced in March that its CEO Jeff Gennette would retire next year and Bloomingdale’s chief executive Tony Spring would take over the role.