Department store giant Macy’s (NYSE:M) on Tuesday cut its full-year forecast, saying it anticipates deteriorating consumer spending on discretionary items like apparel that will force the department store chain to use heavy markdowns to move items off shelves.
The warning comes even as the retailer reported a fiscal second-quarter profit and revenue that topped analysts’ expectations.
Macy’s now sees fiscal 2022 revenue in a range of $24.34 billion to $24.58 billion, down from prior estimates of $24.46 billion to $24.7 billion.
It puts its annual adjusted earnings per share in a range of $4.00 to $4.20, down from prior guidance of $4.53 to $4.95. Wall Street analysts had been looking for full-year guidance of $24.36 billion and $4.51 per share, according to Refinitiv consensus estimates.
Companies that rely on sales of discretionary items like apparel and footwear are at greater risk of underperforming in an environment where shoppers are increasingly thinking about pulling back spending.
“We expect to come out of this uncertain period in a strong position with a healthy balance sheet,” Chief Executive Officer Jeff Gennette said.
Net income in the three-month period ended July 30 fell to $275 million, or 99 cents per share, from $345 million, or $1.08 a share, a year earlier.
Net sales fell slightly to $5.6 billion from $5.65 billion a year earlier.
Macy’s comparable sales on an owned plus licensed basis dropped 1.6% from the prior year. Analysts had been looking for a 2% decrease
M shares gained 95 cents, or 5.1%, to $19.56.
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