Macy's Investors Already Looking Beyond Q3 Report To The Holidays

As Macy’s Inc. M is preparing to release its results on Thursday, Bank of America slashed its estimate on comps from -2 percent to -3 percent citing unfavorable temperatures. The firm expects third quarter results to be soft as Wall Street is expecting a year-over-year drop in EPS and revenue.

The brokerage is expecting a penny less than analysts’ EPS estimate of $0.41, though the firm boosted its estimate by a penny to reflect the sale of assets. More than the third quarter, Bank of America indicated its talks with investors suggested most of them are looking forward to the holiday-dominated fourth quarter.

In a note, the firm said, “We estimate 3Q gross margin were flat in 3Q at 39.8% as the company benefits from better inventory control and its Last Act clearance strategy, partly offset by higher shipping costs due to outsized omnichannel growth. We expect investors to hone in on inventory levels exiting the quarter, we are modeling inventory down 3% exiting 3Q.”

The brokerage thinks the conference call would be centered on the market conditions for consumer and May’s plans to deliver comps in the fourth quarter. The firm thinks investors would be keen to understand whether the retailer could deliver sales number if the weather turned positive.

Bank of America expects the company to provide an update on its real estate tactics. This included shutting down of about 100 stores apart from monetizing key assets.