Shares of Macy’s (NYSE: M) are yet to recover from the multi-year lows seen a few months ago, following its dismal second-quarter results. The department store chain also slashed its full-year outlook, leaving investors with little hope ahead of the third-quarter report, which is expected to be published Thursday before the opening bell.
The ongoing weakness in store-traffic indicates that the slump in comparable sales persisted in the third quarter. Considering the muted top-line performance and unfavorable inventory position, the market will be keeping an eye on gross margin when the results are unveiled. The outcome will depend on how much of the piled-up inventory was cleared in the first half of the year.
Another key area of interest would be the management’s projection for the rest of the year, especially in the backdrop of the intense store remodeling program, which was rolled out last year with the aim of reviving traffic. An optimistic outlook, ahead of the holiday season, might help the stock emerge from the current lows and end the year on a positive note.
Looking Ahead
With the store revamp almost done, it’s time for Macy’s to win the market’s confidence with effective execution in the final months of the year. Though there is uncertainty about the near-term benefits, the growth initiatives, combined with the efforts to strengthen the digital platform and improve logistics capabilities, should start yielding results by next year.
Also see: Walmart stock rises on Q3 earnings beat
Market watchers predict break-even bottom-line results for Macy’s in the third quarter, compared to earnings of $0.27 per share last year. Revenues are expected to be $5.32 billion.
Q2 Outcome
In the July-quarter, a marked decline in gross margin dragged the bottom-line as the company took big markdowns in response to slow sales in the early weeks of the quarter. Adjusted earnings more than halved year-over-year to $0.27 per share. Comparable store sales gained a meager 0.3%, while revenues were flat at $5.5 billion.
Peer Performance
Last week, JCPenney (JCP) posted a narrower net loss for the third quarter, despite unimpressive comparable sales and revenue performance. What helped the store chain is the effective management of inventory and its cost-cutting efforts – something Macy’s can emulate.
Most Popular
PG Earnings: Procter & Gamble Q3 profit climbs, beats estimates
Consumer goods behemoth The Procter & Gamble Company (NYSE: PG) announced financial results for the third quarter of 2024, reporting a double-digit growth in net profit. Sales rose modestly. Core
AXP Earnings: All you need to know about American Express’ Q1 2024 earnings results
American Express Company (NYSE: AXP) reported its first quarter 2024 earnings results today. Consolidated total revenues, net of interest expense, increased 11% year-over-year to $15.8 billion, driven mainly by higher
Netflix (NFLX) Q1 2024 profit tops expectations; adds 9.3Mln subscribers
Streaming giant Netflix, Inc. (NASDAQ: NFLX) Thursday reported a sharp increase in net profit for the first quarter of 2024. Revenues were up 15% year-over-year. Both numbers exceeded Wall Street's