NEW YORK (AP) — Macy's profits and sales slid in the third quarter as the department store had to step up discounts amid a pullback from shoppers stung by inflation.
Yet it topped Wall Street expectations and the New York company raised its earnings outlook, in part due to better credit card revenue. Shares rose nearly 7% before the opening bell Thursday.
“Retail is detail, and our talented and agile team are executing well to compete, “ said Macy's CEO Jeff Gennette in a statement. ”We know the consumer is under increasing pressure and has choices on where to spend. "
Gennette noted that Macy's is attracting shoppers because it has fresh fashion merchandise appealing to shoppers looking for good prices. Its upscale business Bloomingdale's has also fared well as wealthy shoppers haven't pulled back.
Macy's posted net income of $108 million, or 39 cents per share for the three-month period ended Oct. 29. That compares with $239 million, or 76 cents per share for the year-ago period. Adjusted results were 52 cents per share, far exceeding the per-share earnings of 18 cents that Wall Street had expected, according to a survey by FactSet.
Sales slipped 3.9% to $5.23 billion from $5.44 billion in the year-ago period, but that also beat expectations.
Comparable sales — those from established stores and from online — slipped 2.7% including licensed businesses compared with the year ago quarter, but it was up 6% compared with the third quarter of 2019, before the pandemic.
Online sales fell 9% compared with the third quarter of 2021, but they were up 35% compared with the third quarter of 2019.
Macy's took a blow at the beginning of the pandemic as it was forced to close it stores for a few months, but sales rebounded in 2021 when Americans began to refurnish homes or buy casual clothing as they stayed close to home.
But Americans have dramatically shifted away from pandemic-fueled spending as the virus has eased, and that has left a number of retailers with excess inventory unable to sell and thus had to be discounted. Surging prices on food and rent have also redirected spending toward necessities like groceries and gasoline, which hurts stores like Macy's.
In August, Macy's said it cut orders where it could to better sync with customer demand, but that inventory in some categories remained high. It has also cut prices to clear than inventory.
Rival department store Kohl's also reported third quarter earnings and shares sank 4%, despite beating expectations, after it withdrew guidance for the year.
There is a lot going on outside of sales at the retailer, based in Menomonee Falls, Wisconsin. CEO Michelle Gass said this month she's leaving for the top post at The Gap. There has also been heavy pressure from big stakeholders in the company for changes in leadership.
Kohl's board has formed search committee to find a new CEO. Director Tom Kingsbury is serving as interim CEO.
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