Macy’s Inc., seeing waning consumer demand, reported first-quarter top and bottom line declines and has revised its guidance for the year downward.
Net income for the quarter ended April 29 was $155 million, or $0.56 per diluted share, compared to $286 million, or $0.98 per share, in the year-ago period.
Earnings before interest, taxes, depreciation and amortization came to $466 million versus $684 million in the year-ago quarter.
Net sales of $5 billion were down 7 percent compared to $5.35 billion in the first quarter of 2022. Comparable sales were down 7.2 percent.
Brick-and-mortar sales decreased 6 percent versus the first quarter of 2022, and digital sales decreased 8 percent versus the first quarter of 2022.
In pre-market trading Thursday, Macy’s stock was down 9.35 percent, or $1.27, to $12.32.
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“During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, strength of our inventory management and operational efficiencies,” Jeff Gennette, chairman and chief executive officer of Macy’s Inc., said in a statement Thursday. “We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories.
“We have moved quickly to take the appropriate actions to meet current consumer demand and manage our expenses,” Gennette added. “Our revised guidance reflects incremental clearance markdowns to address excess spring seasonal merchandise in the second quarter, along with adjustments to the category composition and inventory levels in the back half of the year.”
By division, Macy’s comparable sales were down 7.9 percent. The best-selling categories last quarter were beauty, particularly fragrances, men’s tailored clothing, women’s career sportswear, and off-price with Backstage.
Bloomingdale’s comparable sales were down 4.3 percent. Best-selling categories last quarter were beauty, particularly fragrances, women’s and men’s contemporary apparel, housewares, and the outlet locations.
At Bluemercury, comparable sales were up 4.3 percent. Best-selling categories were clinical and medical skin care and color during the quarter.
Merchandise inventories were down 7 percent year-over-year and down 16 percent compared to 2019, “reflecting ongoing disciplined inventory management.”
The company is taking pricing actions in the second quarter to sell through remaining first-quarter seasonal merchandise inventories and May receipts at the Macy’s nameplate and anticipates end of second-quarter merchandise inventories to be down low to mid-single digits compared to last year.
Macy’s Inc.’s gross margin rate for the quarter was 40 percent, up from 39.6 percent in the first quarter of 2022. Versus the first quarter of 2019, gross margin rate increased 180 basis points from 38.2 percent.
Macy’s is now forecasting net sales of $22.8 billion to $23.2 billion for all of 2023. Previously, the retailer projected net sales of $23.7 billion to $24.2 billion.
Comparable sales are seen down 7.5 to 6 percent this year. Previously, comparable sales were projected down 4 to 2 percent.
Adjusted earnings per share are now seen at $2.70 to $3.20, versus the previous forecast of $3.67 to $4.11.
This story was reported by WWD and originally appeared on WWD.com.
