Messi’s ,M) surprised analysts with lower-than-expected earnings and declining sales in the second quarter, but downgraded its outlook. more upscale rivals nordstrom ,JWN) is the weight after the closure. Macy’s stock and Nordstrom stock both ticked higher on Tuesday before the bell.
Retail stocks have posted generally mixed results over the past week as inflationary pressures cut consumer spending.
walmart ,wmt) beat estimates last week. And target ,TGT) missed earnings but impacted revenue forecasts. Both big box giants reaffirmed guidance for the rest of the year. discount retailer TJX ,TJX) missed out on revenue, while kohlso ,KSS) And Ross Stores ,roast) cut its outlook on Thursday.
Major funds remain cautious about the impact of inflation on consumer spending. According to an August 15 SEC filing, David Tepper’s Appaloosa Management hedge fund pulled out of its position at Nordstrom and reduced its stake in Macy’s by 24% in the second quarter.
Expectations: Macy’s earnings for the quarter fell 33% to 86 cents per share in consensus views. Analysts forecast a 2.9% sales slowdown, to decline from $5.65 billion in 2021 to $5.49 billion.
Result: Macy’s earnings per share fell 22% to $1. Revenue declined to $5.6 billion.
Overall, same-store sales were down 1.5% during the year while Macy’s brand comparable sales were down 2.9%. Comparable sales growth for Bloomingdale’s and Blumercury partially offset the decrease.
Inventory climbed 7% year-over-year. And Macy’s notes that its sales rate has slowed since Father’s Day, driven by industry-wide excess inventory and slowing discretionary spending by consumers.
Outlook: Macy’s cut its full-year EPS target to $4-$4.20 with revenue of $24.34 billion to $24.58 billion. It had forecast adjusted EPS of $4.53-$4.95 on sales of $24.46 billion to $24.7 billion.
The department store giant cited risks from worsening discretionary spending, inventory levels within the industry and a more pronounced macro slowdown.
On Monday, Deutsche Bank lowered its price target for Macy’s stock from 29 to 25. Analyst Gabriella Carbone thought the apparel retail management team would take a “prudent” approach for the second half of the year.
Macy’s stock: Shares were up 1.6% on Tuesday following Macy’s earnings call. Macy’s stock closed a year down 29% on Monday and is down more than 50% from its 52-week high in mid-November.
JWN Stock Earnings Preview
Expectations: Analysts expect Nordstrom’s earnings per share to climb 63% to 80 cents. Revenue is projected to grow 7.8% to $3.96 billion from last year’s $3.65 billion.
Shares of JWN rose 1% ahead of Tuesday’s open. Nordstrom’s stock is up about 1.5% so far in 2022, but is trading below its 52-week high of 37.81 since last August.
You can follow Harrison Miller on Twitter for more stock news and updates. @ibd_harrison
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