NEW YORK – Macy's profit and sales for the holiday quarter slid with inflation leading some customers to pull back, but it beat Wall Street expectations and its outlook for 2023 didn't disappoint given the uncertain economic environment.
Shares rose almost 10% before the opening bell Thursday.
Macy's joins a growing list of retailers feeling the sting of a consumer spending slowdown in an economic environment that's growing more unpredictable. A number of retailers including Kohl's, Walmart and Target all offered in the past week annual financial outlooks lower than what analysts expected.
While inflation in recent months has eased, it still remains stubbornly high, weighing on Americans. Part of the reason inflationary pressures have eased, at least for some things, is a campaign by the Federal Reserve to cool spending, and the economy. Those efforts make using credit cards more expensive, which can negatively impact retailers.
In early January, Macy's had tempered its sales outlook for the fiscal fourth quarter after shoppers spent less than expected during the lull between Thanksgiving weekend and the final days before Christmas. It said at the time that shoppers will remain under financial pressure, particularly in the first half of 2023 and had planned inventory accordingly.
Macy's earned $508 million, or $1.83 per share, in the quarter ended Jan. 28. Stripping out certain items, its earnings were $1.88 per share. That tops the per-share earnings of $1.57 that Wall Street had expected, according to a survey by Zacks Investment Research.
That compares with net income of $742 million, or an adjusted profit of $2.45 per share, in the year-ago period.
Sales declined to $8.26 billion from $8.67 billion, but that also topped analyst projections.
Comparable sales dropped 3.3% on an owned basis and were down 2.7% on an owned-plus-licensed basis.
“In the fourth quarter, we benefited from our disciplined inventory approach and compelling gift-giving strategy, which allowed us to provide fresh fashion and style at great values for all our customers. We were competitive but measured in our promotions, took strategic markdowns and intentionally did not chase unprofitable sales," Chairman and CEO Jeff Gennette said in a statement.
For fiscal 2023, Macy's Inc. predicts adjusted earnings of $3.67 - $4.11 per share on sales of $23.7 billion to $24.2 billion.
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