Shares of Macy’s Inc. slid as much as 8% in after-hours trading on Friday after the department-store chain gave a more downbeat forecast on its fourth-quarter sales, with management citing big “lulls” in the holiday-shopping season and saying customers would likely feel the squeeze from inflation into next year.
The chain issued the sales and profit figures as many companies prepare to report fourth-quarter earnings, and as Wall Street zeroes in on consumer behavior during the key holiday shopping season. Investors have soured on many retail stocks amid worries rising prices would dampen leisure spending and spending on typical holiday gifts like clothing and electronics.
Macy’s M, +2.64% executives said they now expected fourth-quarter sales to land within the “low-end to mid-point” of prior expectations for between $8.161 billion to $8.401 billion. They said they expected adjusted earnings per share to be within the company’s previously forecast range of $1.47 to $1.67.
Analysts polled by FactSet expect adjusted earnings per share of $1.61 on sales of $8.301 billion for the quarter.
“Black Friday/Cyber Monday sales were in line with our expectations, while the week leading up to and following Christmas were ahead,” Macy’s Chief Executive Jeff Gennette said in a statement. “However, the lulls of the non-peak holiday weeks were deeper than anticipated.”
“Based on current macro-economic indicators and our proprietary credit card data,” he continued, “we believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly.”
Macy’s said its inventories for the quarter were “on track to be slightly below last year and down mid-teens relative to 2019.” Many retailers’ warehouses and back rooms last year ended up backlogged, after people loaded up on online purchases during the pandemic lockdowns and COVID-19 stimulus faded. Meanwhile, supply chains remained finnicky and rising prices through 2022 forced customers to spend more on essentials — leaving products like large appliances and clothes unsold.
Amid the inventory shake-out that resulted, retailers through the holiday season hurled discounts at consumers, on worries that rising prices for basics would hurt demand for non-basics. But store chains have offered mixed expectations for the holiday period.
Still, Adobe on Thursday said online sales surpassed $210 billion and beat expectations for the holiday season. Costco Wholesale Corp. reported an increase in December sales, even though online sales fell.
Macy’s on Friday said demand for clothing was still strong during the quarter. The retailer said its Bloomingdales stores also “continued to outperform.”
Analysts say that rising prices have led customers to get pickier about the clothing they buy. But they said that retailers, while cautious about the year ahead, generally aren’t preparing for a recession in 2023.