Macy’s (NYSE: M) reported strong second-quarter earnings Tuesday, but still opted to cut its full-year forecast as it anticipates a decline in sales of discretionary items such as apparel. According to the retailer, the plummet in sales would push it to enforce extreme markdowns as a means of selling off the merchandise.
The department store chain reported earnings of USD1 per share, compared to the expected USD0.85 a share. Revenue amounted to USD5.6 Billion, higher than analysts anticipated USD5.49 Billion. Furthermore, net income for the period fell to USD275 Million, or USD0.99 per share, down from the previous year’s USD345 Million, or USD1.08 a share.
“During the second quarter, we delivered solid results, despite the challenging environment,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “Our teams have consistently responded to the dynamic landscape with disciplined, data-driven actions to ensure the health and stability of our business. We believe that we are well positioned to respond to changing consumer behaviors. Despite inflationary pressures, consumers continued to shop Macy’s as a style source and leading gifting destination. Additionally, Bloomingdale’s and Bluemercury captured demand for luxury brands, resulting in both nameplates outperforming in the quarter.”
Nevertheless, Gennette says he believes shoppers will begin to buy gifts, decorations and holiday merchandise as early as October, as has occurred in both 2020 and 2021. Macy’s continues to face changing consumer behavior as a consequence of record inflation.
“Over the past two years, our Polaris strategy has made us faster and more agile, which has been essential to navigate rapidly changing consumer trends and macro conditions. We expect to come out of this uncertain period in a strong position with a healthy balance sheet, new capabilities and a talented team ready to capture renewed demand,” Gennette continued.