Markets

Macy's: It's Bad. Real Bad.

Shares Macy's (M) have dropped to its lowest level since 2011 after the struggling department-store operator reported earnings and sales that missed Street expectations.

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Macy's reported a profit of 24 cents a share, missing forecasts for 35 cents, on sales of $5.34 billion, below analyst estimates for $5.47 billion.

Dig in deeper, and the numbers were just as bad. RBC's Brian Tunick explains why Macy's is getting clobbered:

M reported Q1 comps of -5.2% vs our model for -2% and EPS of $0.24, below our estimate for $0.37. Although the company suggests that the results were in line with the management's internal expectations (and maintains FY guidance for comps in the range of flat to down 2% and EPS of $2.90-3.15), with shares down 11% clearly the market finds Q1 results disappointing.
More specifically we note that the -5% comps suggests 250bps deceleration in comps from Q4, despite y/y easy compares (against -6% comp last year). Gross margins were down 100bps (vs our model for down 17bps) which is the biggest gross margin decline since Q4'15. SG&A deleverage and real estate gains of $68M were in largely in line with our model. Inventory was down 2% at the end of the quarter, versus total sales decline of 7.5% y/y.

Shares of Macy's have tumbled 10% to $26.17 at 9:38 a.m. today, and its results are causing other department stores to fall as well. JC Penne y (JCP), which reports on Friday, has fallen 4% to $5.48, and Nordstrom (JWN), which reports after the close, has dropped 5.2% to $47.39.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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