Macy’s Earnings: What to Know About the Stock After Data Breach - Barron's

Macy's stock fell after the company reported earnings. Photograph by Alastair Pike/AFP via Getty Images

There is a lot of disruption in the retail sector. New business models and e-commerce trends threaten older companies. Investors can see it in results. Kohl’s stock cratered after earnings this week. Target shares jumped. Off-brand retailers are doing fine. Department store aren’t. Even shares of Home Depot and Lowe’s —two seemingly similar companies—went in opposite directions after reporting earnings one day a part from one another this week.

Macy’s (ticker: M) earnings results, reported Thursday morning, added to the disruptive and difficult narrative. Shares are down 5.8% in premarket trading.

The company beat Wall Street estimates, reporting comparable third-quarter earnings of 7 cents a share. Analysts expected break-even results. Not bad.

But same-store sales declined 3.9%. Analyst expected comparable-store sales to decline only about 1%. And the company cut full-year sales and earnings guidance.

“After seven consecutive quarters of comparable sales growth, we experienced a deceleration in our third-quarter sales,” said Macy’s CEO Jeff Gennette in the company’s news release. “Our third-quarter sales were impacted by the late arrival of cold weather, continued soft international tourism and weaker than anticipated performance in lower tier malls.” Investors never like it when companies blame the weather.

Management says same-store sales are expected to fall more than 1% in 2019. Prior guidance called for gains of about 0.5%. It’s a big swing entering the important holiday season. And earnings per share are expected to be about $2.67 in 2019, down from prior guidance of $2.95 a share.

It isn’t a great earnings “print,” and it has been a tough year for Macy’s shareholders already. The stock is down about 50% year to date, as of Wednesday’s closing price. Major stock indexes, for comparison, such as the Dow Jones Industrial Average and the S&P 500 and, obviously, up year to date—at or near record highs.

Management hosts an earnings conference call and webcast for analysts and investors at 8 a.m. eastern time.

Write to Al Root at allen.root@dowjones.com

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2019-11-21 13:06:00Z
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