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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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.”