Although some customers pulled back from Macy’s because of inflation during the holiday quarter, the retailer outperformed Wall Street estimates, and its outlook for 2023 didn’t disappoint, considering the current economic climate.
Leading retailers have recently told investors they are unsure of what to expect in 2023 due to the various uncertainties surrounding the health of the U.S. and global economies.
On the other hand, Macy’s encouraged investors on Thursday with a somewhat optimistic projection for profit this year.
In contrast to analysts’ expectations of $3.78 in earnings per share, the firm expected to earn between $3.67 and $4.11 per share.
Before the opening bell, shares increased by roughly 10%.
Macy’s is the latest store to feel the pinch of a consumer spending slowdown in a market that is becoming more unstable.
Several retailers, including Kohl’s, Walmart, and Target, provided worse yearly financial outlooks last week than analysts had anticipated.
Even if inflation has decreased recently, it is still stubbornly high and burdens Americans. The Federal Reserve’s campaign to slow down spending and the economy is one of the reasons inflationary pressures have subsided, at least in some areas.
These initiatives raise credit card costs, which could harm retailers.
According to a statement released by Macy’s on Thursday, the retailer “expects that the elevated level of uncertainty within the macroeconomic environment will persist” this year.
Early in January, Macy’s revised it’s fiscal fourth quarter sales forecast after discovering consumers had spent less than anticipated during the slow period between Thanksgiving and the final days before Christmas.
At the time, it predicted that consumers would continue to have financial challenges, especially in the first half of 2023, and had planned inventory appropriately.
For the three months that ended on January 28, Macy’s earned $508 million, or $1.83 per share.
Their earnings per share, after excluding some items, were $1.88. According to a Zacks Investment Research study, this surpasses the $1.57 per share earnings that Wall Street had anticipated.
The results compare to the prior-year period’s net income of $742 million or an adjusted profit of $2.45 per share.
Although Macy’s expects challenges in the coming year (with a net sales decline of 1% to 3% in the fiscal year ahead), its better-than-expected Q4 results are encouraging because they show that the numerous changes the company has been making over the past few years, such as moving its store mix away from malls, have started to pay off.
Although sales dropped to $8.26 billion from $8.67 billion, they exceeded expert expectations.
In contrast to expert predictions, Macy’s Inc. predicts a modest increase in 2023 sales of $23.7 billion to $24.2 billion.
Comparable sales decreased by 2.7% on an owned basis and 3.3% on an owned basis when including licensed sales.
In a prepared statement, Chairman and CEO Jeff Gennette stated, “We were aggressive but measured in our promotions, took strategic markdowns, and consciously did not chase unprofitable sales.