Macy’s, Inc. (NYSE: M) reported its second quarter financial results before the opening bell on Wednesday. The retailer missed analysts’ earnings estimates and lowered its guidance, sending shares plummeting by as much as 17%.
For the second quarter, Macy’s reported earnings of USD 0.28 per share on revenue of USD 5.546 Billion. Analysts expected earnings of USD 0.45 per share on revenue of USD 5.542 Billion.
Macy’s noted that its slower quarter was a result of rising inventory challenges such as a fashion miss in its women’s sportswear private brands, slow sell-through of warm weather apparel and accelerated decline in international tourism.
While Macy’s primary segments lagged behind, the Company did mention that its Destination Businesses, Growth50 stores, and Backstage expansion witnessed stronger sales.
Despite declining inventory sales, Macy’s reported same-store sales growth of 0.3%, however, analysts expected 0.4% for the quarter. Nonetheless, net income has severely declined from USD 166 Million a year ago to USD 86 Million at the end of the second quarter.
“That said, we had a slow start to the quarter and finished below our expectations. Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women’s sportswear private brands, slow sell-through of warm weather apparel and the accelerated decline in international tourism.” said Jeff Gennette, Macy’s Chairman and Chief Executive Officer.
Based on the quarterly results, Macy’s lowered its guidance for the remainder of the year. Now, the Company expects earnings between USD 2.85 to USD 3.05 per share compared to its previous forecast range of USD 3.05 to USD 3.25 per share. Macy’s expects revenue to remain flat year-over-year.
“We took markdowns to clear the excess Spring inventory and are entering the Fall season with the right inventory to meet anticipated customer demand,” concluded Gennette.
Following Macy’s second quarter results, its stock price is now down more than 45% this year.