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Macy's (M) Updates Q4 View, Strategic Endeavors on Track

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Macy's, Inc. (M - Free Report) announced a revised view for fourth-quarter fiscal 2022. The company performed well during the holiday period, registering Black Friday/Cyber Monday sales in line with the management’s expectations. The company’s occasion apparel and gift-giving business remained strengths while inventory composition and price points were aligned with consumers’ requirements. Impressively, Bloomingdale’s and Bluemercury continued to perform well in the holiday season.

The company resonated well with the customers’ needs by utilizing data and analytics tools in relation to the shifts in demand. This resulted in clean inventories as well as an anticipated gross margin rate almost in line with the earlier issued fourth-quarter view.

On its last earnings call, Macy’s projected the gross margin rate to shrivel not more than 270 basis points from the prior-year fiscal period’s level, implying the impacts of markdowns and a promotional environment. Management intends to report fourth-quarter and fiscal 2022 results in early March 2023.

Net sales are presently anticipated to be at the lower-end to mid-point of its earlier guided range of $8,161-$8,401 million. Adjusted earnings per share are now envisioned to remain in the previously guided band of $1.47-$1.67. On a percentage basis, the overall end-of-quarter inventories remain marginally on track below last year and down mid-teens with respect to 2019.

Moving ahead, management believes that the consumer will remain pressured in fiscal 2023, mainly in the first half, given the present macroeconomic indicators and the company’s proprietary credit card data. Thus, it has accordingly planned the inventory mix and depth of initial buys. It also looks forward to taking a balanced approach to merchandise receipts and is on track to providing fashion and value across the nameplates and channels.

What’s More?

Macy’s has been making moves to enhance customers’ shopping experiences. The company is ramping up digital capabilities to offer better digital experiences. Its launch of Macy’s Marketplace includes products in a wide range of categories such as pets, home, kids, baby and maternity, beauty and health as well as toys and electronics.

Management remains optimistic about Macy’s Media Network with growing revenues, advertisers and campaign counts. The company is smoothly progressing in reimagining its private brands. M is repositioning its physical store footprint to better serve customers and support omnichannel market sales growth.

Macy's Polaris Strategy to adapt better to the evolving retail ecosystem bodes well. This strategy includes strengthening customer relationships, expansion of assortments, accelerating digital growth, optimizing the store portfolio and reducing costs. Moreover, the company’s expanded Star Rewards Loyalty program has been aiding better customer engagement.

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Impressively, this Zacks Rank #3 (Hold) company’s shares have increased 28.9% in the past three months, outperforming the industry’s 18% growth.

Key Picks in Retail

We highlighted three top-ranked stocks, namely Tecnoglass (TGLS - Free Report) , Chico's FAS (CHS - Free Report) and Urban Outfitters (URBN - Free Report) .

Tecnoglass manufactures and sells architectural glass,windows, and aluminum products for residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and EPS suggests 11.2% and 9% growth, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.

Chico's FAS, an omnichannel specialty retailer, currently sports a Zacks Rank of 1. CHS has a trailing four-quarter earnings surprise of 87.5%, on average.

The Zacks Consensus Estimate for Chico's FAS’s current financial-year sales and EPS suggests growth of 19.6% and 127.5%, respectively, from the year-ago reported figures.

Urban Outfitters, a fashion apparel and accessories retailer, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 11.2%, on average.

The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and EPS suggests 3% and 27.9% growth, respectively, from the year-ago reported figures.

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