Macy’s Inc. Shows Q3 Declines But Raises 2022 Earnings Outlook

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Macy’s Inc., battling inflation and an increasingly promotional retail landscape, saw top and bottom line declines in the third quarter, but beat Wall Street expectations on both fronts.

In addition, Macy’s reaffirmed its 2022 guidance for annual sales and upped its earnings guidance for this year, reflecting confidence on how it’s managing through the challenging times.

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Last quarter, net income declined more than 50 percent to $108 million, or $0.39 per diluted share, from $239 million, or $0.76 per diluted share in the year-ago quarter. This compares to diluted earnings per share of $0.01 in the third quarter of 2019.

Net sales declined 3.9 percent to $5.23 billion from $5.44 billion in the year-ago quarter, but were up 1.1 percent compared to the third quarter of 2019. Comparable sales declined 3.1 percent on an owned basis and were down 2.7 percent on an owned-plus-licensed basis.

Inventories were up 4 percent versus 2021, which the company said reflected ongoing planning and supply chain discipline.

“Our Polaris strategy is working. In the third quarter, we achieved solid top line results and a strong beat to our bottom line guidance. Macy’s brand position as a style and fashion source resonated with our customers, while luxury continued to outperform at Bloomingdale’s and Bluemercury,” said Jeff Gennette, chairman and chief executive officer of Macy’s Inc. “Retail is detail, and our talented and agile team are executing well to compete. We know the consumer is under increasing pressure and has choices on where to spend. As a leading gifting destination with fresh inventory across the value spectrum, we are ready to meet our customers’ needs this holiday season.”

“We are operating from a position of strong financial health – with appropriate levels of inventory, a strong balance sheet with ample liquidity, investment grade credit metrics and fixed interest rate debt in a rising interest rate environment. We have the tools, data-driven processes and talented teams to manage through this uncertain time and are committed to long-term, profitable growth,” added Adrian Mitchell, chief financial officer of Macy’s, Inc.

Macy’s reaffirmed its forecast for $24.34 billion in annual sales this year, and raised its earnings expectations to $4.07 to $4.27 per diluted share, from $4 to $4.20.

By division, Macy’s comparable sales last quarter were down 4.4 percent on an owned basis and down 4 percent on an owned-plus-licensed basis.

Bloomingdale’s comparable sales on an owned basis were up 5.3 percent and on an owned-plus-licensed basis were up 4.1 percent.

Bluemercury comparable sales were up 14 percent on an owned and owned-plus-licensed basis.

Gross margin for the quarter was 38.7 percent, down from 41 percent in the third quarter of 2021. The decline was attributed to increased promotions and permanent markdowns within the Macy’s brand, as the company sold through slower moving categories including casual apparel, soft home and warmer weather seasonal goods.