An individual walks past a Macys store in Hyattsville, Maryland, on February 22, 2022.
Stefani Reynolds | AFP | Getty Images
Macy’s on Thursday reported fiscal first-quarter profits and sales ahead of analysts’ expectations, as shoppers returned to malls to buy for brand new outfits, luggage and luxury goods regardless of decades-high inflation that has threatened to curtail consumption.
The department store chain, which also owns Bloomingdale’s, reaffirmed its fiscal 2022 sales outlook and raised its profit guidance, expecting stronger bank card revenue for the rest of the yr.
It joins Nordstrom in bucking a broader trend within the retail industry of downbeat forecasts and warnings of a consumer pullback on discretionary spending. In recent days, firms including Walmart, Goal, Kohl’s and Abercrombie & Fitch have cautioned that higher expenses on logistics and labor will proceed to eat into their profits within the near term.
Macy’s shares rallied to shut Thursday up 19%, at $22.92.
The retailer still expects 2022 revenue to be flat to up 1% compared with 2021 levels, which could be a spread of $24.46 billion to $24.7 billion.
It now projects earnings, on an adjusted basis, between $4.53 and $4.95 per share, up from a previous range of $4.13 to $4.52 per share.
“While macroeconomic pressures on consumer spending increased in the course of the quarter, our customers continued to buy,” Chief Executive Officer Jeff Gennette said in a press release. He added that the corporate saw a shift amongst consumers back into stores and toward clothing for special occasions similar to women’s dresses and tailored men’s items.
Here’s how Macy’s did in its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.08 adjusted vs. 82 cents expected
- Revenue: $5.35 billion vs. $5.33 billion expected
For the three-month period ended April 30, Macy’s reported net income of $286 million, or 98 cents per share, compared with net income of $103 million, or 32 cents a share, a yr earlier.
Excluding one-time items, it earned $1.08 per share, topping analysts’ expectations for adjusted earnings per share of 82 cents.
Revenue grew nearly 14% to $5.35 billion from $4.71 billion within the year-ago period, also topping analysts’ forecast.
Digital sales climbed 2%, representing 33% of net sales for the quarter. The retailer said it had 44.4 million energetic customers, up 14% from the prior yr, aided by Macy’s loyalty program, which helped draw more people online and into stores.
Same-store sales for each its owned and licensed stores grew 12.4% compared with the prior yr. Analysts polled by Refinitiv had been searching for a 13.3% increase.
Gennette told analysts on a post-earnings conference call that high-income consumers have thus far been less impacted by inflation, lifting sales of costlier goods at Macy’s Bloomingdale’s business.
Consumers who make lower than $75,000 in annual income were more more likely to frequent Macy’s off-price Backstage business and appeared most affected by rising prices, but they still spent extra money, Gennette said.
“We operate across the worth spectrum from off-price to luxury,” the CEO said on the decision. “This, coupled with our wide assortment of categories, products and types, gives us the flexibility to flex with consumer demand.”
The corporate also saw international tourism pick back up within the quarter, in keeping with Gennette, driving traffic at Macy’s department store locations in greater cities, including Latest York. There was a noticeable uptick in tourism from Central and South America, in addition to Europe, he said.
Macy’s reported inventory levels as of April 30 that were up 17% from the prior yr and down 10% compared with 2019 levels.
Macy’s said those levels were somewhat inflated as shoppers shifted away from buying energetic and casual wear, in addition to home goods. Supply chain constraints also loosened over the quarter, it said, leading to a better percentage of inventory receipts than the retailer had expected.
Nevertheless, Gennette said there remains to be significant uncertainty across the retailer’s supply chain amid continued pandemic lockdowns in China and ongoing labor negotiations on the port in Los Angeles.
“Aspects like these drive us to proceed taking a prudent and disciplined approach with our lead times and forecasting,” he said.