Macy’s shares drop after mixed Q1 2023 earnings report and lowered full-year outlook.

Macy’s Inc (NYSE: M), a conglomerate holding company based in the United States that sells consumer goods, released its earnings report for the first quarter of 2023 on June 1st. The report showed that Macy’s had net sales of $4.98 billion during the first three months of the year (Q1 2023), which was a decrease of about 7% compared to the same period last year. However, analysts surveyed by REFINITIV had expected the company to report revenue of about $5.04 billion during the first quarter.

It is worth noting that the company’s net income for the first quarter was $155 million, which equated to 56 cents per share, down from $286 million or 98 cents per share a year ago. As a result of this news, M shares continued to drop, trading around $13.09, down approximately 4%, during Thursday’s pre-market.

According to the latest stock market data, M shares have decreased by approximately 40% in the last three months, after declining by 42% last year.

Macy’s Q1 2023 Financial Highlights

The company, which is valued at $3.83 billion, declared a regular quarterly dividend of 16.54 cents per share on the common stock, which will be paid to shareholders on July 3, 2023, based on a snapshot taken of shareholders on June 15, 2023. Macy’s also reported that its merchandise inventories for the first quarter were valued at $4.607 billion. However, the company noted that the remaining part of the year is expected to be lower than anticipated.

“The company is taking a cautious approach to the remainder of the year and is reducing its annual 2023 sales and earnings guidance to reflect anticipated macroeconomic impacts to the consumer,” Macy’s stated.

Despite this, the company’s CEO, Jeff Gennette, noted that the first quarter exceeded expectations with a gross margin rate of 40.0%, up from 39.6% in the first quarter of 2022.

Regarding the Bluemercury segment, Macy’s reported that comparable sales increased by 4.3% on an owned basis, with approximately 676,000 active customers shopping the Bluemercury brand on a trailing twelve-month basis. The company also noted that Bloomingdale’s brand reported 4.1 million active customers on a trailing twelve-month basis. However, Bloomingdale’s comparable sales decreased by approximately 3.9% on an owned basis.

“During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, the strength of our inventory management, and operational efficiencies. We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories,” said Gennette.

Going forward, the company promised its customers that Nike will be returning to its stores starting in October. As a result, Macy’s anticipates that sales will increase as the festive season approaches in the second half of the year.