Macy’s, Inc. (NYSE: M) stock experienced a premarket decline on Monday following the release of updated fiscal fourth-quarter guidance. The department store chain anticipates net sales for the quarter to land at or slightly below the lower end of its previous projection of $7.8 billion to $8.0 billion. This contrasts with the current analyst estimate of $7.885 billion.
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While Macy’s maintains its adjusted earnings per share forecast for the fourth quarter at $1.40 to $1.65 (compared to the $1.57 estimate), the lowered sales outlook has sparked concern among investors.
Positive Performance in Key Areas
Despite the overall sales revision, Macy’s reported quarter-to-date comparable sales growth in its strategic “go-forward” business. This includes the top-performing Macy’s First 50 locations and luxury brands like Bloomingdale’s and Bluemercury. Digital sales also demonstrated comparable sales growth during the period.
However, comparable sales in non-First 50 Macy’s locations, including those slated for closure, fell short of expectations and contributed to negative comparable sales figures. This underscores the challenges Macy’s faces in revitalizing its less profitable stores.
“Bold New Chapter” Strategy and Future Outlook
The updated guidance comes as Macy’s strives to implement its “Bold New Chapter” strategy, announced in February 2024. This initiative focuses on enhancing profitability by shutting down underperforming stores and concentrating resources on its most successful locations.
Macy’s Chairman and CEO, Tony Spring, expressed optimism about the strategy, highlighting the positive response to Macy’s First 50 locations and plans to expand similar initiatives to 75 additional stores in fiscal 2025. He emphasized the company’s strong position to gain momentum with a more robust store portfolio and a dedicated focus on executing the core pillars of the “Bold New Chapter” strategy.
Macy’s is scheduled to release its complete fourth-quarter and year-end results in early March 2025. These results will provide a more comprehensive picture of the company’s financial performance and the progress of its strategic initiatives.
Market Reaction
As of Monday morning, Macy’s (M) shares were trading down 1.71% at $15.57 in premarket trading, reflecting investor reaction to the lowered sales guidance. The stock’s performance in the coming days will likely depend on further analysis of the updated guidance and the broader market sentiment.
