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