Macy’s Spooked Investors by Uncharacteristically Pessimistic Guidance

Macy's beat Wall Street profit expectations today, on June 1, but substantially lowered its FY guidance after a sharp drop in sales of non-core staples in March. Shares fell as much as 10% in premarket trading. Here’s relevant summary:

• Earnings per share: 56 cents adjusted vs. 45 cents expected
• Revenue: $4.98 billion vs. $5.04 billion expected
• Net income came in at $155 million, or 56 cents per share, compared with $286 million, or 98 cents per share, a year earlier.

Revenue fell about 7% to $4.98 billion from $5.35 billion in the year-ago period. Sales also missed analysts’ forecast. Comparable sales on an owned-plus-licensed basis dropped 7.2% for the quarter, worse than the 4.7% drop expected by analysts.

The company adopted a cautious approach for the rest of the year, lowering its annual sales and earnings guidance for 2023 to reflect the expected macroeconomic impact on consumers. The company now expects fiscal 2023 revenue to be in the range of $22.8 billion to $23.2 billion (from $23.7 billion to $24.2 billion) and adjusted diluted EPS to be in the range of $2.70 to $2.70 and $3.20 (from $3.67 to $4.11).

The department store operator, which also owns namesake brand Bloomingdale's and beauty chain Bluemercury, said it expects comparable owned plus licensed sales to decline between 6% and 7.5% during the period, down from a previous forecast of a 2% to 4% decline.