Macy’s reports second quarter profit amid unexpectedly weak sales due to customer cautiousness

Macy’s saw a return to profitability in the second quarter, although it faced another decline in sales as consumers deal with inflation and focus on buying essential items. The company, which includes Bloomingdale’s and Bluemercury, adjusted its yearly sales forecast due to a more selective consumer base. Despite posting a profit of $150 million, or 53 cents per share, surpassing Wall Street predictions, sales dropped by nearly 4% to $4.94 billion. Share prices fell 8% before the market opened on Wednesday.
Comparable sales, including online and in-store purchases, decreased by 3.3%, with Macy’s stores experiencing a 3.6% decline in sales, while Bloomingdale’s saw a 1.4% decrease. On the other hand, same-store sales at Bluemercury increased by 2%. The company has been in discussions with potential buyers but recently ended talks with two investment firms due to insufficient bids and uncertainties about financing.
Macy’s is focused on improving its performance by implementing plans to close 125 stores and modernize the remaining 350 over the next three years. The company’s CEO mentioned that sales have been increasing at the first 50 revamped stores for two consecutive quarters. They are also shifting towards luxury sales, announcing the opening of 15 upscale Bloomingdale’s stores and 30 luxury Bluemercury locations to appeal to customers seeking higher-end products and services.
Despite reaffirming its earnings per share outlook, Macy’s adjusted its annual net sales forecast to be between $22.1 billion and $22.4 billion, lower than previous estimates. The company expects comparable sales to drop by 2% to 0.5%, worse than the previous projection. Macy’s aims to navigate these challenges by focusing on strategic initiatives to drive growth and adapt to changing consumer preferences.