Macy’s third-quarter sales fell with consumers cautious about spending, but sales and profits both beat Wall Street expectations. The department store also raised the top end of its full-year revenue and adjusted profit forecasts.
Shares rose more than 10% before the market opened on Thursday.
Total sales fell 7% to $4.86 billion, with sales at brick-and-mortar stores and online sales both down 7%. However, that topped the $4.77 billion that analysts polled by Zacks Investment Research had asked for.
Sales at stores open at least a year, a key indicator of a retailer’s health, also fell 7%. Macy’s same-store sales fell 7.6%, while Bloomingdale’s same-store sales fell 3.2%.
Spending by Americans has been an engine for the entire economy, but months of rising prices and higher costs of credit are starting to show.
Retail sales slipped in October, according to US data released this week, ending six straight months of gains. Some of that decline was due to falling prices for both gasoline and cars, however.
Macy’s, which also runs Bloomingdale’s luxury 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.
Excluding certain items, earnings were 21 cents per share. Wall Street asked for equity results.
“We delivered better-than-expected top- and bottom-line third-quarter results and enter the holiday season in a healthy inventory position,” President and CEO Jeff Gennette said in a prepared statement.
A host of retailers reported quarterly results this week. Also on Thursday, Walmart posted better-than-expected third-quarter results as its low prices appeal to shoppers looking for deals in a tough economic environment. But it gave a muted outlook and shares slipped early.
Target on Wednesday posted better-than-expected profits for its third quarter, but sales slipped with customers growing more careful with their money.
Home Depot had a strong third quarter, but sales fell there as well. Customers are holding off on larger home renovations and purchases of big-ticket items like appliances, which are often purchased with credit cards.
Macy’s now forecasts full-year revenue between $22.9 billion and $23.2 billion. Its previous outlook was for revenue of $22.8 billion to $23.2 billion. The company now forecasts adjusted earnings in a range of $2.88 to $3.13 per share. It previously predicted $2.70 to $3.20 per share.
Last month Macy’s Inc. announced that it is accelerating the expansion of its small-format stores as it seeks to serve shoppers looking for 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 around 42. The next round of expansion begins in fall 2024.