Macy’s shares jumped after quarterly earnings beat expectations

Messi Shares jumped on Thursday, as the company said it pulled in holiday shoppers looking for gifts and halted promotions.

But the department store operator, which includes the high-end Bloomingdale’s banner and the cosmetics chain Bloomercury, said it still plans for a more volatile year ahead.

Macy’s said it expects net sales to decline in a range of 1% to 3% in the fiscal year compared to 2022, which could translate to between $23.7 billion and $24.2 billion. It said it expects adjusted earnings per share to be in the range of $3.67 to $4.11.

Shares of the company were up 10% in morning trading Thursday.

On a call with investors, Macy’s CEO Jeff Gennette said Macy’s expects discretionary spending to remain under pressure as consumers continue to “shift toward services and commodities.”

In the coming year, he said, Macy’s is focused on increasing sales by updating its own brands, opening more stores outside of malls, and growing its luxury business and online marketplace.

Here’s how Macy’s did for the three-month period that ended Jan. 3. 28 compared to what analysts had expected, based on Refinitiv estimates:

• Earnings per share: $1.71, adjusted for. expected $1.57
• Revenue: $8.26 projected for. $8.26 billion expected

Fourth-quarter net income fell to $508 million, or $1.83 per share, from $742 million, or $2.44 per share, a year earlier. The company reported adjusted earnings per share of $1.88. Excluding tax benefits, it delivered adjusted earnings per share of $1.71, higher than the $1.57 that analysts had expected, according to Refinitiv. Revenue fell about 5% from $8.67 billion a year ago.

Comparable sales on an owned plus license basis were down 2.7% over the year-ago period, but increased 3.3% compared to the fourth quarter in 2019.

Macy’s results indicate that sales patterns rebounded in the final weeks of the quarter. In early January, the company shared early holiday numbers. At the time, it said it expected its sales to come in on the lighter side of forecasts. The company said it noticed customers watching their spending more carefully and buying fewer items for themselves while shopping for gifts in November and December.

Macy’s stood out from other retailers in another way: It did not handle as many unsold goods. At the end of the fourth quarter, its inventory was down about 3% year-over-year and down about 18% compared to 2019.

This means that the retailer has less merchandise to sell at a deep discount, even if it has to compete with retailers who have made a lot of sales.

In the quarter, Genette said in a press release that the company “was competitive but measured in our promotions, took strategic cuts, and didn’t purposefully chase unprofitable sales.”

Bloomingdale’s and Bloomercore were the strongest parts of the company’s business. Bloomingdale’s comparable sales increased 0.6% year-over-year on a licensed-ownership basis, as shoppers bought stylish apparel and beauty products. Bluemercury’s comparable sales were up 7.2% on an owned basis, as shoppers sought newer, more colorful makeup along with skin care products.

In Macy’s stores and on its website, the company said it saw “the effects of macroeconomic pressures” in the fiscal fourth quarter. However, she said she saw strength in sales of gifts and occasion-based items such as menswear, dresses, and beauty products. Sales of sportswear, casual apparel, and household goods such as blankets, pillows, and towels were down from the previous year.

As of Wednesday’s close, Macy’s shares are down about 1% so far this year. Its stock tracks the S&P 500, which is up about 3% over the same period. Shares of the company closed at $20.43 on Wednesday, bringing Macy’s’ market capitalization to about $5.5 billion.

Read Macy’s full earnings release.