Macy's Inc. (NYSE:M) released its second-quarter financial results before the opening bell on Aug. 14. While the company's revenue met expectations, its earnings fell short of estimates because it reduced prices on unsold merchandise.
By the numbers
The department store chain posted earnings of 28 cents per share, which missed analysts' projections of 45 cents. Revenue was $5.546 billion, topping expectations of $5.542 billion.
Comparable store sales inched up 0.2% on an owned basis and 0.3% on an owned plus licensed basis.
Reflecting on the company's performance, Chairman and CEO Jeff Gennette said:
"Macy's Inc. delivered another quarter of comparable sales growth. 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. We took markdowns to clear the excess Spring inventory and are entering the Fall season with the right inventory to meet anticipated customer demand."
As a mall-based store, Macy's is under pressure as more and more consumers shop online. The company is widening its store labels and launching more off-price Backstage stores. It also introduced a technology that permits customers to leave out the line at the register.
Macy's, by virtue of its updated app and membership program, is trying to lure more loyal customers. In several locations, the retailer is adding stop-in shops for trendy brands.
The company provided a revised 2019 annual guidance based on the quarter's performance.
Macy's projects comps growth, both on owned and owned plus licensed basis, to grow from flat to 1%. Adjusted diluted earnings per share are estimated to be between $2.85 and $3.05, down from its original guidance of $3.05 to $3.25. Additionally, management sees flat revenue in 2019.
Disclosure: I do not hold any positions in the stocks mentioned.
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