Macy's lowers FY outlook as Q1 sales, profits drop

Macy’s has downgraded its full-year outlook as sales fell 7 percent in the first quarter amid falling consumer demand.

The US department store giant made net sales of 5 billion dollars in the first quarter, with brick-and-mortar sales down 6 percent and digital sales down 8 percent.

CEO and chair Jeff Gennette told investors: “We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories.”

But he added that the company has “moved quickly to take the appropriate actions to meet current consumer demand and manage our expenses”.

Macy’s net profit narrowed to 155 million dollars in the first quarter from 286 million dollars the prior year.

Macy’s beats Q1 earnings guidance, but lowers FY outlook

Gennette said: “During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, strength of our inventory management, and operational efficiencies.”

Based on its first-quarter results, Macy’s said it is taking a “cautious approach” to the remainder of the year, and is accordingly lowering its full-year sales and earnings guidance.

The company now expects sales of between 22.8 billion dollars and 23.2 billion dollars, compared to its previous guidance of between 23.7 billion dollars and 24.2 billion dollars.

It expects adjusted diluted earnings per share of between 2.70 dollars and 3.20 dollars, compared to its previous estimate of between 3.67 dollars and 4.11 dollars.

Gennette said the revised guidance “reflects incremental clearance markdowns to address excess spring seasonal merchandise in the second quarter, along with adjustments to the category composition and inventory levels in the back half of the year”.