The third quarter was a tough one for Macy’s, so much so that the company reduced its full-year earnings per share guidance by 28 cents and its comparable store sales from flat to slightly up to negative territory, down 1.5% to 1% in its owned plus licensed stores.
In the third quarter, Macy’s recorded company net income of $2 million, or one cent per diluted share, versus $62 million, or 20 cents per diluted share, in the year-earlier period. Adjusted company net income, excluding one-time charges, came in at $21 million, or seven cents per diluted share, versus $83 million, or 27 cents per diluted share, in the period a year prior.
Despite the lower numbers, Macy’s topped a MarketBeat-published analyst consensus estimate of four cents per adjusted diluted share.
Comparable sales in owned stores slid 3.9%, and those in owned plus licensed stores slipped 3.5% in the quarter year over year.
The company posted net sales of $5.17 billion versus $5.4 billion in the year-previous period. Operating income in the quarter slipped to $52 million from $147 million in the period a year before.
“After seven consecutive quarters of comparable sales growth, we experienced a deceleration in our third quarter sales,” said Jeff Gennette, Macy’s chairman and CEO. “While we anticipated a negative comp as we were lapping a very strong third quarter last year, the sales deceleration was steeper than we expected. However, having cleared the excess inventory we faced earlier in the year, we were able to take a more balanced approach to sales and profit in the quarter, resulting in significantly improved margin compression versus the first half of the year. Our third quarter sales were impacted by the late arrival of cold weather, continued soft international tourism and weaker than anticipated performance in lower tier malls. We also experienced a temporary impact on our e-commerce business due in part to work on the site in preparation for the fourth quarter. The team has completed that work, the site is upgraded and our customers can expect an improved experience this holiday season. Based primarily on the impact of our third quarter sales trend, we are updating our annual guidance.”
Gennette said that Macy’s has confidence that its holiday strategy will pay off.
“The Macy’s, Bloomingdales and Bluemercury teams are aligned and committed to delivering a great experience for our customers in our stores, on our digital sites and through our mobile apps,” he said. “We have fully updated our Growth150 stores and completed the 2019 expansion of Backstage. We have curated an expanded gift assortment with great values in all categories and developed a powerful marketing calendar for both our best and occasional customers. This holiday season, we also have even more flexible, secure and convenient fulfillment options for our customers including pick up in store and same day delivery.”