Macy’s, the renowned department store, has exceeded market expectations for quarterly profit, showcasing adept inventory strategies and a robust beauty product demand. The company’s stock surged by up to 14% as a testament to its impressive performance.
In sync with a broader U.S. retail trend, Macy’s has effectively communicated its endeavors to streamline inventories post-2022 peaks, signaling positive momentum entering the pivotal holiday shopping season.
Outgoing CEO Jeff Gennette emphasized Macy’s strong inventory position as it approaches the holiday period. Notably, merchandise inventories at Bloomingdale’s parent company saw a substantial 6% year-over-year reduction and an impressive 17% decrease compared to 2019.
The third quarter witnessed a remarkable uptick in gross margins, with a significant 160 basis points increase. This boost primarily resulted from a commendable 110 basis points rise in merchandise margins. Reduced markdowns within the Macy’s brand and lower freight costs contributed to this favorable trend.
While maintaining agility in promotions, Macy’s remains cautiously optimistic about consumer spending during the holidays. Incoming CEO Tony Spring acknowledged customers’ discerning spending habits against the backdrop of the broader economic landscape.
Credit card revenues experienced a 100 basis points decline year-on-year, reflecting challenges faced by Macy’s core middle-income consumers in repaying debts amid rising interest rates.
Despite a 7.1% decline in net sales to $4.86 billion, marking the sixth consecutive quarter of decreases, Macy’s showcased strength in beauty and off-price offerings, offsetting weaknesses in other discretionary categories, according to Insider Intelligence analyst Rachel Wolff.
Excluding items, Macy’s reported earnings of $59 million, or 21 cents per share, surpassing expectations of a break-even scenario. Furthermore, Macy’s raised the lower end of its full-year profit target, now anticipating adjusted earnings per share between $2.88 and $3.13, positioning the company optimistically for the future.
Explore more about Macy’s stellar performance and strategic moves in the retail landscape.
