Macy's, one of the leading names in the retail sector, has revised its full-year sales forecast, reflecting a challenging discretionary consumer market. As the department store operator navigates through fiscal uncertainties, its topline revenue for the second quarter showed a decline compared to the previous year, prompting the company to adjust its expectations accordingly. The retail giant announced that it now anticipates sales to range between $22.1 billion and $22.4 billion for the current fiscal year.
This adjustment contrasts sharply with the prior projections, initially set between $22.3 billion and $22.9 billion. Analysts covering the company via Capital IQ had expected revenue figures around $22.43 billion, underscoring the significant shifts occurring in consumer behavior. Chief Financial Officer Adrian Mitchell, during an earnings call, articulated, "Our outlook assumes a more discriminating consumer and heightened promotional environment relative to our prior expectations.
We believe our range gives us room to address the ongoing uncertainty in the discretionary consumer market." This statement hints at the broader economic landscape influencing shopper habits, suggesting a move towards more considered spending. The company's stock plummeted by 14% in trading on Wednesday, reflecting investor concerns over the revised guidance.
Despite the challenges, Macy's holds on to its forecast for full-year adjusted earnings, which the company estimates will fall between $2.55 and $2.90 per share, while the market consensus stands at $2.78. In the three-month period ending August 3, Macy's reported an adjusted earnings per share (EPS) of $0.53, significantly improving from $0.26 in the same quarter the previous year, and surpassing analyst estimates which projected EPS of $0.29.
However, sales for the quarter slipped by 3.8%, landing at $4.94 billion and missing the Street's expectations of $5.05 billion. "We entered the second quarter with an expectation that discretionary spending would remain stable, reflecting a resilient but choosy consumer," said Chief Executive Tony Spring to analysts.
"However, as the quarter progressed, our customer became more discerning, which we attribute to ongoing macroeconomic uncertainty and an increasingly complex news cycle." This reflects the evolving sentiment within the consumer landscape. When analyzing comparable sales, Macy's experienced a 4% decline on an owned basis, significantly deviating from analysts' forecasts of a mere 1.5% decrease.
By brand comparison, Macy's own comparable sales dropped 4.5%, while its sister brand, Bloomingdale's, saw a slight dip of 1.1%. Positive news came from Bluemercury, where comparable sales increased by 2%, showcasing some resilience in a tough market. Looking ahead to the third quarter, Macy's forecasts an adjusted earnings range between a loss of $0.04 per share and a modest profit of $0.01, which includes an estimated $30 million asset sale gain from non-core assets.
Projected sales are expected to hover between $4.7 billion and $4.82 billion, with analysts predicting a normalized EPS of $0.01 alongside revenue expectations of $4.82 billion. Price: 15.29, Change: -2.45, Percent Change: -13.79. $M..