Macy’s on Friday warned its holiday-quarter sales will come in on the lighter side, saying consumers’ budgets are under pressure and that it anticipates that squeeze to continue into this year.
The department store operator said net sales are now expected to be at the low- to midpoint of its previously expected range of $8.16 billion to $8.4 billion. It expects adjusted diluted earnings per share to be in the previously issued range of $1.47 to $1.67.
For the year-ago period, Macy’s reported revenue of $8.67 billion and adjusted earnings per share of $2.45.
Shares of the company fell about 4% in aftermarket trading Friday.
Macy’s is the latest retailer to provide clues about the consumer, as investors await holiday results and look for signs of whether demand is holding up as inflation remains high.
CEO Jeff Gennette said Macy’s put up strong Black Friday and Cyber Monday sales and saw strength in gift-giving and occasion apparel, but “the lulls of the non-peak holiday weeks were deeper than anticipated.”
He said in a news release that the retailer, which includes higher-end department store chain Bloomingdale’s and beauty chain Bluemercury, has taken action to prepare for a year that may be tougher. For instance, he said, it has closely managed its inventory so it can stay nimble and has the merchandise that customers want.
Bloomingdale’s and Bluemercury outperformed the rest of the business, Gennette said, and the company expects gross margins for the holiday season will be about in line with expectations.
Total end-of-quarter inventories are on track to be slightly below last year and down by the midteens compared with 2019, Macy’s said.
As it orders inventory, Gennette said it is using customer data to pick merchandise that will sell and cater to shoppers who seek fashion and value.
But the retailer anticipates a more challenging sales environment ahead, Gennette said.
“Based on current macro-economic indicators and our proprietary credit card data, we believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly.”
Macy’s shared a preview of fourth-quarter expectations ahead of the ICR Conference. Gennette, Macy’s Chief Financial Officer Adrian Mitchell and Chief Merchandising Officer Nata Dvir, will participate in the investor conference next week.
The company will report its holiday-quarter and full fiscal-year results in early March.