Macy’s Sales Slide As Retailer Issues ‘Cautious' 2023 Outlook

Macy’s (M) second-quarter revenues fell amid declines across its in-store, online, brick-and-mortar and digital businesses as well as its credit card segment due to delinquencies.

The retailer's sales and earnings results beat expectations, however, helped by clearance markdowns and promotions.

In response to the mixed results, Macy’s stock fell by more than 10% in the day’s trading.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

For the quarter ended July 29, Macy’s reported net sales of  $5.13 billion, down 8.4% from a year ago, and adjusted diluted earnings of 26 cents per share, down 74%. Brick-and-mortar sales fell 8% and digital sales decreased 10%, compared to a year ago.

Credit card delinquencies rose

Macy’s posted other revenue of $150 million, an $84 million decrease from a year ago. The decline was driven by credit card revenues that were negatively impacted by an increased rate of delinquencies, the company said.

While delinquencies were expected to rise as part of a normalizing of the credit environment, the speed at which this occurred for the company and the broader credit card industry since the company’s first-quarter earnings call was faster than expected, Macy’s said. This negatively impacted results and led to an increase in the portfolio’s bad debt outlook, it added.

“In the second quarter, we delivered better-than-expected top- and bottom-line results,” said chair and CEO Jeff Gennette. “Our teams surgically implemented clearance markdowns and promotions to effectively clear spring seasonal receipts and ensure fresh assortments for the fall and holiday seasons.”

The company said that sales in beauty, particularly fragrances and prestige cosmetics, were strong as were women’s career sportswear, men’s tailored and off-price with Backstage, the company said. Active casual and sleepwear remained unchanged, it added.

Gennette said the company continues “to see uncertainty in the macroeconomic environment.”

Because of that and the results year-to-date, Macy’s reaffirmed its “cautious” full-year outlook of adjusted earnings per share of $2.70 to $3.20 on net sales of $22.8 billion to $23.2 billion.

• Dick’s Sporting Goods Cuts Profit Outlook As Inventory Theft Worsens
• Lowe’s Beats Q2 Earnings Estimates As Sales Decline Slightly
• Walmart Shoppers Turn Out To Drive Up Quarterly Results