Macy's earnings report points to challenging holiday shopping season

Marcus Newton
November 10, 2017

Macy's Inc shares fell $0.17 (-0.97%) in premarket trading Thursday.

Kohl's said online sales increased 15 percent for Q3, and the company continues to grow the percentage of online orders that are fulfilled by stores.

"Overall, we're pleased with the results for the third quarter and we remain on track to meet our full-year sales and earnings guidance for 2017".

Macy's reaffirmed its outlook for full-year comparable sales on an owned basis to decline between 2.2 percent and 3.3 percent, with comparable sales on an owned plus licensed basis to decline between 2.0 percent and 3.0 percent.

For its third quarter ending in October, the retailer earned an operating profit of 23 cents per share on sales of $5.28 billion, versus analyst estimates of 19 cents per share on revenue of $5.31 billion. Excluding restructuring costs and other items, Macy's earned 23 cents per share, beating the average analyst estimate of 19 cents, and up from 17 cents past year. But the department store chain reported weaker-than-expected sales as it continues to have a hard time pulling in shoppers into its doors. "Importantly, we also saw better gross margin performance primarily due to our tightly controlled inventory position", said Macy's Inc. Macy's added that it expects continued improvement in trends in the fourth quarter, including a solid lift from loyalty and digital, and intends to head into 2018 with momentum.

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"A highlight of the third quarter was the launch of the new Star Rewards loyalty program - our best customers are responding positively", Gennette said. The company also reduced its guidance for profit during fiscal 2017 to a maximum of $2.95 a share, down from the previous top level of $3 a share.

Most Macy's stores will open at 5 p.m. local time on Thanksgiving and close at 2 a.m., similar to past year.

Stocks are opening lower on Wall Street Thursday with telecommunications, industrials and materials sectors leading the drop. On the bright side, Macy's said it had a double-digit jump in online sales for the 33rd straight quarter.

Consensus estimates call for fourth-quarter EPS of $2.48 on revenues of $8.51 billion. In Clothing & Home early results are encouraging and in worldwide we now have a profitable and robust business.

Kohl's - with 1,156 stores nationwide, including 116 in California - enjoyed "strong results" during the back-to-school season but a "soft" middle of the quarter "as we experienced disruptions from the hurricanes and other unseasonable weather", Kohl's CEO Kevin Mansell said in a statement. "We believe both of these tests have the potential to drive incremental traffic to our stores, which as you know is our number one priority".

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