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Macy’s Stock Drops as Annual Revenue Expectation Gets Trimmed

UTC by Benjamin Godfrey · 3 min read
Macy’s Stock Drops as Annual Revenue Expectation Gets Trimmed
Photo: Depositphotos

Macy’s is counting on early holiday sales to help maintain its revenue and earnings target for this current fiscal year.

American department store Macy’s Inc (NYSE: M) has seen a minor slump in stock price despite impressing investors as it recorded a better than expected revenue and Earnings Per Share (EPS) in the second quarter that was better than analysts’ expectations. Despite the current economic outlook, Macy’s recorded a $5.6 billion revenue in the second quarter as compared to the $5.49 billion expected from Refinitiv analysts.

Earnings per share came in at $1 as against the 85 cents that were expected. Macy’s, however, decided to taper down its expectations for the rest of the year as it fears consumers may track back their spending amidst growing inflationary worries.

Per Macy’s new projections, it is now seeing a fiscal revenue in the range of $24.34 billion to $24.58 billion, a figure slightly down from prior estimates of $24.46 billion to $24.7 billion. Against its previously forecasted adjusted earnings per share of $4.53 to $4.95, Macy’s now looks forward to an earning in the range of $4 to $4.20.

These new estimates are very conservative, considering Wall Street’s forecast of $24.36 billion in revenue and $4.51 in adjusted earnings per share.

“The consumer is not as healthy as they were in prior quarters,” Chief Financial Officer Adrian Mitchell told analysts on a conference call. “We have seen declining retail traffic in areas of weakening apparel sales over the quarter as the consumer faces higher costs on essential goods, particularly grocery.”

One of the major units that propped up Macy’s earnings is the Bloomingdale’s and Bluemercury banners, both of which captured rich consumers’ demands in the second quarter. Macy’s sales trackback was recorded majorly from low-income earners, and rather than shift their focus to less expensive items, they became more selective across the board.

Macy’s Business Outlook and Impact on the Stock Price

As impressive as Macy’s business in the second quarter was, the company’s stock price is currently trading at a price of 0.83% to $19.15 in the Pre-Market.

To adjust its business to soothe all its clients amidst the growing concerns about inflation and a tightening economy, Macy’s says it will accelerate the development of its Digital Marketplace. Already, CEO Jeffrey Gennette said the Polaris turnaround which features a focus on its online marketplace rather than its stores have been yielding fruits.

As he pointed out in a press release, Gennette said the Polaris turnaround is “essential to navigate rapidly changing consumer trends and macro conditions.”

While exploring the digital options and scaling back operations in some of its physical stores, Macy’s has been making a number of functional partnerships to bring value to the crop of stores it still has operational.

“The past couple of years have been good ones for Macy’s and the company is now in a better state than it was pre-pandemic,” said Neil Saunders, managing director of GlobalData Retail. “However, unless the business capitalizes on this fortune to make major changes, it will continue to lag the overall market.”

Macy’s is counting on early holiday sales to help maintain its revenue and earnings target for this current fiscal year.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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