Macy’s Inc. issued a downbeat outlook for sales in the current quarter, a sign that executives might have been too optimistic about their expectations for a solid holiday shopping season.
Photographer: Bing Guan/Bloomberg
America’s largest department-store operator said it’s forecasting net sales in the current quarter to be at or slightly below the $7.8 billion to $8 billion executives were expecting as of last month. Analysts surveyed by Bloomberg are anticipating $7.8 billion.
Shares of Macy’s fell 5.8% in Monday trading in New York. The company’s shares fell 16% last year, compared with a 12% gain for the S&P Midcap 400 Index.
A number of consumer companies released earnings and provided updated guidance Monday morning ahead of the ICR conference taking place this week in Orlando, Florida. Macy’s was a laggard among the group, and illustrated how difficult it remains to break through in today’s retail environment where shoppers remain pinched by stubbornly high prices.
Abercrombie & Fitch Co. announced better-than-expected holiday sales, but its share price tumbled 16% in Monday trading in New York after its sales growth target fell short of some analysts’ expectations.
Abercrombie’s boost to its net sales growth target is “perhaps not as large as some had thought,” said Dylan Carden of William Blair. “The risk you hold from here is the 2025 guide,” expected in March, with the likely sales growth deceleration in the A&F brand posing a risk to margins, he said.
Other retailers saw bright spots. Lululemon raised its guidance and said it expects fourth-quarter sales to surpass market expectations. Shake Shack also reported fourth-quarter sales that surpassed Wall Street’s expectations. American Eagle Outfitters, Inc. said sales have been stronger than expected in the current quarter while while Urban Outfitters Inc. reported sales rose 10% in the two months ended December 31.
On Friday, Nordstrom Inc. boosted its forecast for annual comparable sales.
Cautious Shoppers
Macy’s maintained its outlook for earnings per share, according to a statement published Monday morning.
Macy’s executives said in December they were expecting a cautious but engaged shopper during the holiday season and raised their forecast for sales — an outlook that looks like it will ultimately prove too rosy. On Monday, the company said Macy’s comparable sales were roughly flat in the nine weeks ended Jan. 4 compared to the year before.
Since he took over nearly a year ago, Chief Executive Tony Spring has focused on closing down poorly-performing Macy’s stores and investing more resources in the 50 stores that he and his team think have greater potential. Those stores, as well as higher-end Bloomingdale’s and beauty chain Bluemercury, continued to report positive comparable sales in the quarter through Jan. 4, the company said in the statement.
Macy’s said it’s expanding that initiative to an additional 75 Macy’s locations, which Spring said in the statement reflects an “ongoing positive response” to the 50-store strategy. That includes hiring more staff and a focus on selling fewer-but-better items that are particularly popular with department-store shoppers, such as shoes and handbags, among other measures.
Accounting snafu
Macy’s is trying to move past an accounting snafu.
In December, Macy’s cut its profit outlook significantly as a result of an investigation into the financial impact of an employee who hid expenses over several years. The company said at the time that most of the impact of the hidden delivery expenses would be recorded in the fourth quarter. Executives have said that the ex-employee acted alone and didn’t hide the expenses for personal gain.
Executives will present Tuesday at 8am at the ICR conference. The company expects fourth-quarter results in early March.
German retail sales rose in 2024, but growth should be more modest this year due to the high level of uncertainty, according to retail association HDE.
Last year, retail sales rose 1.1% compared to the previous year in inflation-adjusted terms, official data showed on Friday. The HDE forecasts 0.5% growth in real terms this year.
“Consumption and the retail sector in Germany will not really gain momentum in 2025 either,” said HDE managing director Stefan Genth. “There is simply too much uncertainty,” he said. “Wars, high energy costs and overall economic stagnation are a toxic cocktail for consumption.”
In nominal terms, retail sales rose by 2.5% in 2024 and are expected to grow by 2.0% in 2025, according to HDE’s forecast.
The latest HDE survey with 700 retailers shows that 22% of respondents expect sales to increase this year, while almost half of them expect results to be below the previous year’s level.
In December, retail sales fell by 1.6% compared with the previous month, official data showed. Analysts had predicted a 0.2% increase.
Many big names in UK retail had a good Christmas season — despite the sector being generally sluggish — but it seems John Lewis Partnership (JLP) may not have been one of them.
The retailer — which operates its eponymous department stores and webstore, plus Waitrose supermarkets — has missed its profit target after a disappointing festive season.
It hasn’t shared any info officially but internal documents seen by The Telegraph suggest bad news to come when it does release its results.
Those internal documents have only been shared with staff so far with the company saying that sales have fallen short of expectations and it’s unlikely to achieve its hoped-for £131 million full-year profit.
The company is said to have blamed “lower consumer confidence and weaker than expected market confidence” for the sales miss in the month to 21 December, although also the fact that key trading days fell outside the period.
Sales targets were missed at both of the firm’s chains, although the newspaper said it still claimed it outperformed rivals and staff should be “proud of our performance”.
It will be interesting therefore to see exactly what its figures were as a number of rivals have actually reported a good Christmas. If its stores have beaten other supermarkets and chains like M&S, perhaps its targets were too ambitious in the first place.
We won’t know for a while, but we do know that with M&S resurgent, JLP’s supermarkets and department stores have lost some of their lustre as the destination of choice for Britain’s middle classes.
So what were the firm’s benchmarks? Back in September it had said it was seeing strong demand and expected a significant rise in profits for the year to January. The prior year’s pre-tax profit had been £56 million and the year before that it made a loss.
It had also talked about its turnaround efforts paying off and that it was seeing a “considerable improvement” in performance, with the John Lewis chain in particular expected to benefit from a buoyant second half.
It’s been rumoured for some time that he would exit the label but it’s not yet known what his next step will be.
Jones has been widely praised for his work at Dior with his latest men’s collection shown this month being hailed as a success.
He’s been a key creative at LVMH having also designed its Fendi women’s collections. And he helmed Louis Vuitton’s menswear before he joined Dior.
The company said it “wishes to express its deepest gratitude” to the designer “who has accelerated the development of Men’s collections internationally and has greatly contributed to the worldwide influence of the House by creating an inspiring wardrobe that is both classic and contemporary, and connected to some artists of our time”.
And Delphine Arnault, who’s chairman and CEO of Christian Dior Couture,added: “I am extremely grateful for the remarkable work done by Kim Jones, his studio, and the ateliers. With all his talent and creativity, he has constantly reinterpreted the House’s heritage with genuine freedom of tone and surprising, highly desirable artistic collaborations.”
Jones meanwhile called it a “true honour to have been able to create my collections within the House of Dior, a symbol of absolute excellence. I express my deep gratitude to my studio and the ateliers who have accompanied me on this wonderful journey. They have brought my creations to life. I would also like to take this opportunity to thank the artists and friends I have met through my collaborations. Lastly, I feel sincere gratitude towards Bernard and Delphine Arnault, who have given me their full support.”
Entertainment8 years ago