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Macy's Warns Consumers Will be Pressured in 2023. Retail Shares Are Slipping. -- Barrons.com

Barron's · 01/06/2023 18:35
Sabrina Escobar

Macy's stock fell on Friday after the department store said fourth-quarter sales would come in at the low to middle end of its guidance, and warned that consumers will be pressured in 2023.

Macy's (ticker: M) is now expecting net sales to be at the low end to the midpoint of its previously issued range from $8.16 billion to $8.4 billion. The earlier outlook dates to a Nov. 17 earnings call for its fiscal third quarter. Analysts surveyed by FactSet are forecasting sales to clock in at $8.3 billion for the quarter.

Adjusted earnings per share are still forecast to range from $1.47 to $1.67, while gross margins will also be in line with previous guidance, the company said in a press release. Macy's plans to release fourth-quarter and fiscal 2022 results in March.

"Black Friday/Cyber Monday sales were in line with our expectations, while the week leading up to and following Christmas were ahead," said CEO Jeff Gennette in a statement. "However, the lulls of the nonpeak holiday weeks were deeper than anticipated."

Heading into 2023, the company expects consumers will "continue to be pressured," especially in the first half of the year, Gennette said, a factor management took into account when planning inventories for the year.

Shares of Macy's were down 4% to $21.24 in after-hours trading on Friday. The company's update also dragged down shares of Nordstrom ( JWN), Dillard's ( DDS), and Kohl's ( KSS), which were off 1.8%, 0.8%, and 2%, respectively.

Although preliminary data suggest that holiday sales were overall solid this year, Macy's update implies that Santa didn't favor all retailers equally when writing up his Christmas list. Indeed, analysts have long fretted that department stores could be left in the lurch as the industry undergoes what experts call "retail bifurcation," a process that has seen shoppers gravitate to stores on the extreme ends of the price scale.

Corrections & Amplifications:

Macy's said fourth-quarter sales would come in at the low- to mid-point of its previously issued guidance. A previous version of this article incorrectly said the company had lowered its guidance for the fourth quarter.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

(END) Dow Jones Newswires

January 06, 2023 18:35 ET (23:35 GMT)

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