Macy’s lowered its earnings guidance for the full fiscal year while maintaining its sales forecast after posting first-quarter earnings that beat analyst estimates despite lower comparable sales.
Net income was $38 million, or 13 cents per diluted share, versus $62 million, or 22 cents per diluted share, in the year-earlier quarter. Adjusted for one-time events, the company reported net income of $46 million, or 16 cents per diluted share, versus $77 million, or 27 cents per diluted share, in the year-prior period.
A Zacks Investment Research analyst consensus estimate had Macy’s earnings per adjusted diluted share at 14 cents and revenues of $4.46 billion.
Year over year, Macy’s comparable sales declined 2% on an owned basis and down 1.2% on an owned-plus-licensed-plus-marketplace basis in the quarter, the company indicated. At Macy’s namesake stores, comparable sales slipped 2.9% on an owned basis and 2.1% on an owned-plus-licensed-plus-marketplace basis. Bloomingdale’s comps grew 3% on an owned basis and 3.8% on an owned-plus-licensed-plus-marketplace basis. Bluemercury comps advanced 1.5% on an owned basis.
Net sales were $4.6 billion and total revenues were $4.79 billion versus $4.85 billion and $5 billion, respectively, in the year-before quarter. Operating income was $94 million versus $125 million in the year-previous period.
Macy’s maintained its full-year guidance on sales and comps but updated its adjusted diluted earnings per share forecast to $1.60 to $2 from $2.05 to $2.25, as previously stated.
In a conference call, Tony Spring, Macy’s chairman and CEO, said the company’s off-price Backstage operations and its marketplace had performed well in the first quarter. Backstage outperformed Macy’s full-line stores in which they operate by several hundred basis points, he said, while the marketplace operation achieved 40% gross merchandise volume growth.
Spring said Macy’s experienced better performance during the quarter in parts of the home furnishings assortment, particularly in big-ticket goods.
Regarding tariffs, Spring said the company and its partners are in discussion as Macy’s seeks to navigate the uncertain economic environment. Macy’s has renegotiated, cancelled or delayed some orders, he asserted. At last year’s end, roughly 20% of the total Macy’s product originated in China. National brands, which represent the majority of Macy’s sales, sourced 18% from China, while private brands sourced 27% from China, Spring said. Overall, Macy’s China sourcing is down from 32% a yearpast and more than 50% pre-pandemic, Spring said, adding Macy’s is confident that the company can continue to diversify countries of origin for both private and national labels.
Beyond China, Spring said, Macy’s is closely monitoring tariff developments for Southeast Asia and Europe. Macy’s has limited sourcing exposure to Canada and Mexico, he said.
In announcing the first-quarter results, Spring said, “We continued to execute against our ‘Bold New Chapter’ strategy during the quarter, scaling key initiatives that improved our customer experience and contributed to stronger than expected performance across all three of our nameplates. Our first-quarter results give us confidence that we have the right strategy and team in place to navigate the current environment while we continue to invest in our customer on the path to returning Macy’s, Inc. to sustainable profitable growth.”
