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Macy's Reports Uneven Holiday Season as Inflation Continued to Pressure Consumers -- WSJ

The Wall Street Journal · 01/06/2023 16:48

By Suzanne Kapner

The holiday season proved mixed for Macy's Inc., which said it reeled in shoppers on key days before and after Christmas but encountered tepid demand through much of the period.

The department-store chain on Friday said that it expects sales for its year-end period to be at the low-to-midpoint of its previous range of $8.16 billion to $8.4 billion.

It also reaffirmed its fourth-quarter earnings guidance of $1.47 to $1.67 a share and said that it continued to make progress in reducing its inventory levels.

"Based on current macroeconomic indicators and our proprietary credit card data, we believe the consumer will continue to be pressured in 2023, particularly in the first half," Macy's Chief Executive Jeff Gennette said Friday.

The performance from Macy's is a sign that the holiday season was likely an uneven one for retailers as economic woes continued to weigh on consumers. Many shoppers tempered their spending on electronics and jewelry, while shelling out more for food and other non-discretionary items, industry data show.

The only week in November and December when general merchandise sales -- which exclude car dealerships, gas stations and food -- rose above year-ago levels was the week leading up to Christmas, according to market research firm NPD Group, which tracks point-of-sale receipts.

General merchandise sales for the week that ended Dec. 24 rose 14% compared with the same week last year. About half of that growth came from inflation. Unit sales for that week rose 7%, NPD said. Sales for the week ended Dec. 31 fell 1%, resuming declines in November and earlier in December.

A fuller picture of holiday spending will emerge on Jan. 18, when the U.S. Census Bureau reports December retail sales and the National Retail Federation releases its sales report for the winter holiday shopping season.

The trade group estimated that sales in November and December rose 6% to 8% from the same period a year prior. That would reflect a slower pace of growth than the 13.5% increase in 2021 versus 2020. The average sales growth over the past decade was 4.9%, according to the NRF, whose figures exclude sales at car dealerships, gas stations and restaurants.

According to Mastercard SpendingPulse, which measures in-store and online retail sales across all payment types, retail sales from Nov. 1 through Dec. 24 increased 7.6% compared with the same period a year prior. The figures aren't adjusted for inflation and include restaurants, gas stations and convenience stores but not car dealerships.

Restaurants had the biggest gain, according to Mastercard, with sales up 15.1%, as people dined out more now that Covid-19 restrictions have eased. Apparel sales rose 4.4%, but sales of electronics and jewelry fell 5.3% and 5.4%, respectively.

Online sales grew 10.6%, while sales at bricks-and-mortar stores rose 6.8%, Mastercard said.

Mr. Gennette had warned in November of an unexpected slowdown in sales that started in mid-October. He said that shoppers who are under tighter budgets and feeling the impact of inflation depleting their savings were waiting until closer to the holiday to shop.

Last-minute shopping more closely resembles the habits of people in 2019, before the Covid-19 pandemic upended consumers' behavior, he said.

Write to Suzanne Kapner at Suzanne.Kapner@dowjones.com

(END) Dow Jones Newswires

January 06, 2023 16:48 ET (21:48 GMT)

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