Macy’s on Friday warned that holiday quarter sales will come in on the lighter side, saying consumer budgets are under pressure and it expects that pressure to continue this year.
The department store operator said net sales are now expected to be at the lowest to midpoint of the previously expected range of $8.16 billion to $8.4 billion. It expects adjusted diluted earnings per share to be in the previously issued range of $1.47 to $1.67.
For the prior year period, Macy’s reported revenue of $8.67 billion and adjusted earnings per share of $2.45.
Shares of the company fell more than 4% during aftermarket trading on Friday.
Macy’s is the latest retailer to provide consumer clues as investors await holiday results and look for signs of whether demand will continue as inflation remains high.
CEO Jeff Gennette said Macy’s posted strong Black Friday and Cyber Monday sales and saw strength in gift-giving and occasion wear, but “the breaks of the non-peak holiday weeks were deeper than expected.”
He said in a press release that the retailer, which includes higher-end department store chain Bloomingdale’s and beauty chain Bluemercury, has taken action to prepare for a year that may be tougher. For example, he said it has closely managed its inventory so that it can stay nimble and have the merchandise customers want.
Bloomingdale’s and Bluemercury outperformed the rest of the company, Gennette said, and the company expects holiday gross margins to be roughly in line with expectations.
Total inventories at the end of the quarter are on track to be slightly lower than last year and down into the mid-teens compared to 2019, Macy’s said.
As it orders inventory, Gennette said it uses customer data to choose the merchandise that will be sold and is targeting customers who are looking for fashionable items as well as value.
But the retailer expects a more challenging sales environment ahead, Gennette said.
“Based on current macroeconomic indicators and our own credit card data, we believe consumer pressure will continue in 2023, especially in the first half, and have planned inventory mix and depth of initial purchases accordingly.”
Macy’s shared a preview of its fourth quarter expectations ahead of the ICR conference. Gennette, Macy’s Chief Financial Officer Adrian Mitchell and Chief Merchandising Officer Nata Dvir will participate in the investor conference next week.
The company will report its holiday quarter and full fiscal year results in early March.