Shares for Macy’s Inc. closed up 15.02% on Thursday after reporting third-quarter revenue and earnings that topped Wall Street expectations.
The New York-based department store chain posted net sales of $5.23 billion in the third quarter of 2022, down 3.9% versus the same time last year but up 1.1% versus the third quarter of 2019. This quarter’s sales figures beats Refinitiv estimates of $5.2 billion.
On the company’s earnings call on Thursday, Macy’s chairman and CEO Jeff Gennette noted that “compelling product, disciplined inventory controls and solid execution” drove strong top and bottom line results in Q3. “These results are further proof that our Polaris strategy, first introduced in February of 2020, is working,” the CEO said.
Gennette also mention that customers continue to return to in-person, post-pandemic shopping experiences. “Customers are searching for occasion-based product, including career and tailored sportswear, dresses and luggage rather than popular pandemic categories such as active, casual sportswear, sleepwear and soft home, that skew more heavily towards digital purchases,” Gennette said.
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The CEO added that these factors contributed to the relative outperformance of brick-and-mortar sales, which declined 1% to last year. Digital sales declined 9% to last year. Relative to 2019, a brick-and-mortar sales declined 9% and digital sales rose 35%, Gennette added.
Macy’s has also made strides in becoming a more relevant department store and a one-stop-shop in Q3, according to Gennette. He nodded to the roll out of Toys “R” Us shop-in-shops within all Macy’s locations last month as well as the late September launch of Macy’s digital marketplace as examples of this notion.
Turning to inventory, Gennette told investors that the company is in “great shape” for the holiday season, up about 4% from last year, but down 12% from 2019 levels. “We have roughly 55% newness for holiday, 30 percentage points higher than 2019, and we are not saddled with older receipts in pandemic category overstocks,” Gennette added. “While we are comfortable with our inventory position, we will continue to proactively adjust promotions and take markdowns necessary to drive sell-throughs in slower moving categories and ensure that we do not carry inventory risk into 2023.”
Looking ahead, the company is reaffirming its annual 2022 sales guidance and raising its earnings guidance. For the full year, the company expect net sales of $24.3 billion to $24.6 billion.
“Our guidance range contemplates the risk associated with softening consumer demand and the impact of the broader competitive landscape,” said Gennette. “We now expect holiday shopping patterns to be similar to 2019 and are taking the appropriate actions to support anticipated higher peaks around Black Friday, Cyber Week and the two weeks before Christmas.”
