Announcing its second-quarter results on Tuesday, Macy’s cut its full-year forecast to $4.00-to-$4.20 per share from the previously expected $4.53-to-$4.95 per share. However, this did little to discourage investors as the company’s stock saw a jump of more than 5% at one point following the announcement.
Macy’s did well in Q2 versus the Wall Street estimates, recording $5.6 billion in net sales versus the $5.49 billion expected. The department store’s gross margin was 38.9%, narrowly missing out on the 39% estimate, but came at adjusted earnings per share of $1.00 compared to an estimated $0.85.
For the full year, Macy’s now expects to see revenue of $24.34 billion to $24.58 billion after previously forecasting revenue of $24.46 billion to $24.7 billion. It anticipates that the customers will further scale down on the non-essential items like clothing, forcing the company to start cleaning its shelves by offering significant discounts.
“The consumer is not as healthy as they were in prior quarters,” Macy’s CFO Adrian Mitchell explained. “We have seen declining retail traffic in areas of weakening apparel sales over the quarter as the consumer faces higher costs on essential goods, particularly grocery.”
Macy’s stock closed at $18.61 on Monday before jumping to $20.20 early on Tuesday. It later settled at $19.31, which marks a 6.69% increase in value in the last month but still remains 29.47% down year to date.