Macy’s Inc (M) Disappoints With Lower Sales, Higher Inventories

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Macy’s Inc (NYSE:M) missed Q1 expectations across the board, reporting lower sales and larger inventories that weighed on margins. M stock fell more than 10% in early trading this morning.

Macy's Inc (M) Disappoints With Lower Sales, Higher Inventories

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New York City-based Macy’s announced earnings per share of 24 cents, off from the 36 cents expected in an analyst consensus., which was $0.12 worse than the Wall Street consensus estimate of $0.36. Revenues fell 7.5% from last year to $5.34 billion, also missing analysts’ forecast of $5.49 billion.

Comparable sales in the retailer’s store fell 5.2% in the latest period, exceeding Wall Street estimates of a near 3% decline. Macy’s began the year with announcement that it would close as many as 68 locations, Last month, the Chicago Tribune reported in that M planned to sell part of its huge Chicago flagship store, a move expected to return more than $100 million to the company.

“We are encouraged by the performance of the pilot programs we tested last year in categories like women’s shoes, fine jewelry, and furniture and mattresses. We look forward to expanding these successful initiatives nationally this year and anticipate they will have a measurable impact on our performance starting in the second quarter, building through the fall. Additionally, our digital platforms showed continued strong growth in the first quarter,” said Jeff Gennette, president and chief executive officer of Macy’s, Inc.

According to the U.S. Bureau of Economic Analysis, personal expenditures in the first quarter of 2017 jumped 4.8% from the year-ago quarter. This was the biggest jump first-quarter consumption this decade.

As InvestorPlace contributor Josh Enomoto noted earlier this week, while these expenditure figures are a credibility boost for President Trump, but they’re worrisome for Macy’s and M stock investors. The American people are clearly opening their wallets again. The real issue is where they’re spending their money.

Macy’s reiterated its full-year EPS outlook of $2.90 to $3.15, on par with analysts’ view of $3.06. It also sees 2017 revenues falling 3.2% to 4.3%, which suggests sales of $24.7 billion to $24.95 billion. Wall Street forecasts are for $24.8 billion.

Finally, M expects full-year comps to fall 2.2% to 3.3%.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/05/macys-inc-m-disappoints-with-lower-sales-higher-inventories/.

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