Macy’s Shares Fall After Earnings Report

3 min readAug 23, 2023

Key Takeaways

Macy’s stock dipped 14% after the company reported earnings and offered up a downbeat forecast
The company beat adjusted earnings and sales estimates
But it doubled down on a cautious outlook for the remainder of 2023

Macy’s reported second-quarter earnings this week. Although the company beat estimates, its third-quarter guidance had investors a little worried. Shares fell about 1.6% immediately following the earnings update. Will the long-time department store staple weather the storm? We’ll discuss below.

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What’s the latest with Macy’s

Macy’s earnings report had some positive aspects to it. Net revenue was $5.13 billion, which is slightly higher than analysts’ estimates of $5.1 billion. That said, the “other revenue” category was $84 million dollars less than last year. The main cause of the lagging “other revenue” was credit card delinquency.

People are having a harder time paying off credit cards in general right now with interest rates as high as they are. Macy’s seems to have been hit particularly hard.

Inventory was also down 10% year over year, and the company emphasized its “ongoing disciplined inventory management and the clearance of excess spring seasonal product.”

Excess spring product aside, Macy’s announced that it would open four new, smaller store locations in the coming months. These might fare better than large mall locations these days.

In terms of what you might find on the shelves at a newer Macy’s, we’re over the comfy loungewear boom of 2020. Luxury fragrance and cosmetics are what’s selling the best. Macy’s will also stock Under Armour and Nike again after not having those brands in stock for several years.

Are analysts buying what Macy’s is selling?

On Tuesday, Macy’s shares fell about 14% when all was said and done. The company’s full-year guidance was conservative and uninspiring for investors. It expects comparable owned-plus-licensed sales to fall 6% to 7.5% compared to last year and it put expected earnings per share somewhere between $2.70 to $3.20. Sales overall will likely be between $22.8 billion and $23.2 billion for the fiscal year.

Macy’s sells mostly clothing and accessories, which means it gets hit harder when consumers pull back on their discretionary spending. Sales have been weakening since the spring, including at Macy’s other brands, like Bloomingdale’s (higher-end) and Bluemercury (skincare and makeup-specific).

The bottom line

The troubling credit card delinquency trend that Macy’s is experiencing might serve as a bit of a bellwether for how consumers are doing. If consumers are having trouble paying down debts, it’s unlikely that they’ll do a lot of shopping for non-essential items. We’re with Macy’s on this one: a cautious outlook for the rest of the year on clothing, accessories, and similar non-essential categories.

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