Macy's Q3 Results Top Estimates, But Slashes FY24 Adj. EPS Outlook

(RTTNews) - Omni-channel fashion retailer Macy's, Inc. (M) reported on Wednesday that net profit for the third quarter declined from last year, reflecting higher expenses and lower revenues. Both adjusted earnings and quarterly net sales topped analysts' estimates.

However, the company's stock is tumbling in pre-market activity after it slashed its adjusted earnings guidance for the full-year 2024, while raising annual net sales outlook. In pre-market activity on the NYSE, Macy's shares are down $1.93 or 11.54 percent to trade at $14.79.

"Our third quarter results reflect the positive momentum we are building through our Bold New Chapter strategy. We are encouraged by the consistent sales growth in our Macy's First 50 locations and the strong performance of Bloomingdale's and Bluemercury," said Tony Spring, Chairman and CEO.

For the third quarter, Macy's reported that net income declined to $28 million or $0.10 per share from $41 million or $0.15 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $11 million or $0.04 per share, compared to $57 million or $0.21 per share in the year-ago quarter.

Total revenue for the quarter declined to $4.90 billion from $5.04 billion in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.03 per share on net sales of $4.72 billion for the quarter. Analysts' estimates typically exclude special items.

Net sales were down 2.4 percent to $4.74 billion from $4.86 billion last year. Comparable sales were down 2.4 percent on an owned basis and down 1.3 percent on an owned-plus-licensed-plus-marketplace basis.

Sales growth at Macy's First 50 locations, Bloomingdale's, and Bluemercury was offset primarily by weakness in Macy's non-First 50 locations as well as its digital channel and cold weather categories.

Macy's, Inc. go-forward business comparable sales were down 2.0 percent on an owned basis and down 0.9 percent on an owned-plus-licensed-plus-marketplace basis.

Macy's brand net sales were down 3.1 percent, with comparable sales down 3.0 percent on an owned basis and down 2.2 percent, on an owned-plus-licensed-plus-marketplace basis.

Bloomingdale's brand net sales were up 1.4 percent, with comparable sales on an owned basis up 1.0 percent and on an owned-plus-licensed-plus-marketplace basis up 3.2 percent.

Bluemercury brand net sales were up 3.2 percent, with comparable sales up 3.3 percent on an owned basis.

Gross margin rate decreased 60 basis points to 39.6 percent, due to product mix and the conversion to cost accounting.

As a percent of total revenue, selling, general and administrative expense increased 160 basis points to 42.1 percent, due to lower total revenue.

Looking ahead to fiscal 2024, the company now projects adjusted earnings in a range of $2.25 to $2.50 per share on net sales between $22.3 billion and $22.5 billion, with comparable owned-plus- licensed-plus-marketplace sales change between down about 1.0 percent and about flat.

Previously, the company expected adjusted earnings in the range of $2.55 to $2.90 per share and adjusted earnings in the range of $2.34 to $2.69 per share after adjusting for delivery expense, on net sales between $22.1 billion and $22.4 billion, with comparable owned-plus- licensed-plus-marketplace sales change between down about 2.0 to 0.5 percent.

The Street is looking for earnings of $2.73 per share on net sales of $22.13 billion for the year.

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