Photo: RetailWire
Publicly traded companies are frequently rewarded when their sales and earnings performance for a given quarter comes in higher than Wall Street’s expectations. That was not the case for Macy’s, Inc. yesterday as the department store retailer saw its share price fall nearly 17 percent in trading after posting positive comps and increasing its outlook for the current fiscal year.
Macy’s posted a 0.5 percent increase in same-store sales in the second quarter. Analysts were looking for the retailer to report a 0.9 percent decline. The chain’s modest increase follows same-store gains of 3.9 percent and 1.3 percent in the previous two quarters after multi-year declines.
Macy’s earnings for the quarter also outperformed expectations at 70 cents per share after excluding one-time items. The Wall Street consensus prior to Macy’s reporting was 51 cents per share.
For the first half of 2018, Macy’s reported same-store sales growth of 2.3 percent, with Bloomingdales’s, Bluemercury and Macy’s all performing well, according to the company’s chairman and CEO Jeff Gennette.
“The combination of healthy stores, robust e-commerce and a great mobile experience is Macy's recipe for success. We are focused on improving our customer journey every step of the way because we know that our customers expect a great experience whenever and wherever they engage with our brands,” said Mr. Gennette in a statement. “We also continue to be disciplined with inventory management, which allows us to give our customers more fashion and freshness, while increasing sales and improving gross margin.”
Most industry watchers seem to see yesterday’s dramatic drop as more of a reaction to how well Macy’s stock has performed this year than disappointment in its reported results.
The retailer does face challenges, as Neil Saunders, managing director of GlobalData and a RetailWire BrainTrust panelist, told CNBC in an interview.
"[Macy's] is still losing market share across a number of categories,” said Mr. Saunders. “Moreover, with the closure of underperforming stores, a natural bounce to comparables is to be expected — especially as some of the trade from shuttered shops finds its way to both other locations and to the digital channel."
- Macy’s, Inc. Reports Second Quarter 2018 Earnings – Macy’s, Inc.
- Macy's plunges 16 percent, leads rout in retail stocks sell-off – CNBC
- Macy's shares tumble as department store struggles to grow sales – CNBC
- Good Isn’t Good Enough at Macy’s – The Wall Street Journal
- CEO thinks momentum is on Macy’s side – RetailWire
- Is Macy’s heading for a rebound? – RetailWire