Macy’s lowers sales forecast amid “consumption downgrade”

NEW YORK, Aug. 21 (Xinhua) — Macy’s Inc. narrowly missed analysts’ expectations for its second-quarter revenue and revised its sales outlook downward for the remainder of the year on Wednesday, attributing the adjustments to intensified discounting by competitors and more cautious consumer behavior.
Sales for the quarter ending Aug. 3 declined by 3.8 percent to 4.9 billion U.S. dollars year over year, the department store operator reported.
Macy’s lowered its guidance for the rest of the year, expecting the top range of its net earnings for the year to be down 2.2 percent to 22.4 billion dollars.
In a statement on Wednesday, Tony Spring, Macy’s chief executive, described the consumer environment as “challenging,” but he insisted that “we are seeing signs of our strategy taking root.”
Spring highlighted some positive aspects of its business, noting that comparable sales at the 50 locations considered key to the company’s future increased by 0.8 percent.
Spring, who took the role this February, introduced “A Bold New Chapter” in the first quarter. The strategy included closing underperforming stores, improving remaining “go forward” locations, and investing in digital sales.
He said customers are not spending as freely across all of Macy’s brands — even higher-end department store Bloomingdale’s.
“We see that there is definitely a softness, a carefulness, a delay in the conversion of purchasing,” he said. “And people on the things that they want, the things that are priced sharply, on the newness, they are responding, but even the affluent consumer is not spending like they were a year ago.”
Macy’s glum outlook came the same day as Target reported its second-quarter results better than expected, topping Wall Street expectations on profit and revenue. Gross profit margins rose to 28.9 percent, up from 27 percent a year ago.
Meanwhile, discount retailer TJX Companies raised its full-year guidance after posting another quarter of strong sales, but its outlook still fell just short of Wall Street’s expectations. The company’s sales rose to 13.47 billion dollars, up from 12.76 billion dollars a year earlier.
“Given all the indicators that we’ve seen in the economy, the things that we hear from economists and the proportion of discretionary spend versus essential spending, that makes us shifted quite a bit,” said Macy’s CFO and COO Adrian Mitchell. ■