Macy’s third-quarter sales declined with consumers cautious about spending, but sales and profit both topped Wall Street expectations. The department store also raised the top end of its full-year revenue and adjusted profit forecasts.
Shares surged more than 11% before the market openedThursday.
Overall sales fell 7% to $4.86 billion, with sales at traditional stores and online sales both down 7%. Still, the performance topped the $4.77 billion that analysts polled by Zacks Investment Research were calling for.
Sales at stores open at least a year, a key indicator of a retailer’s health, also dropped 7%. Macy’s same-store sales declined 7.6%, while Bloomingdale’s same-store sales fell 3.2%.
Spending by Americans has been an engine for the overall all economy, but months of rising prices and higher costs of credit are starting to show.
Retail sales slipped in October, ending six straight months of gains, though the decline was partly driven by falling prices for both gasoline and cars.
Retail sales fell 0.1% last month after jumping a strong 0.9% in September, according to a report released Wednesday by the Commerce Department. September’s figure was revised higher from an initial 0.7% gain. Excluding sales of gas and autos, retail sales ticked up 0.1%.
Macy’s, which also runs upscale Bloomingdale’s stores as well as Bluemercury beauty stores, earned $43 million, or 15 cents per share, in the quarter. A year earlier, the company earned $108 million, or 39 cents per share.
Stripping out certain items, earnings were 21 cents per share. Wall Street was calling for breakeven results.
“We delivered better-than-expected top and bottom line third quarter results and are entering the holiday period in a healthy inventory position,” Chairman and CEO Jeff Gennette said in a prepared statement.
On Wednesday Target posted better-than-expected profit and sales for its third quarter, but inflation still weighed on shoppers.
Home Depot ‘s third-quarter sales fell and the chain narrowed its full-year outlook on Tuesday, but its performance still topped Wall Street’s expectations.
Macy’s now foresees full-year revenue between $22.9 billion and $23.2 billion. Its prior outlook was for revenue of $22.8 billion to $23.2 billion. The company now anticipates adjusted earnings in a range of $2.88 to $3.13 per share. Previously it predicted $2.70 to $3.20 per share.
Last month Macy’s Inc. announced that it was accelerating the expansion of its small-format stores as it looks to cater to shoppers seeking more convenient locations. The department store aims to add up to 30 new small format locations through the fall of 2025, bringing the total number of such stores to roughly 42. The next round of expansion starts in fall 2024.