Why Department Store Major Macy's Shares Are Shooting Higher Today

Department store chain Macy's Inc M shares are surging today after it reported third-quarter FY23 earnings.

The company reported a third-quarter FY23 sales decline of 7% year-on-year to $4.86 billion, beating the analyst consensus estimate of $4.79 billion.

Brick-and-mortar sales decreased 7%, and Digital sales dropped 7% Y/Y.

Comparable sales decreased 7% on an owned basis and down 6.3% on an owned plus licensed basis versus Q3 2022.

The operating margin was 1.7% versus 3.5% last year. Operating income for the quarter declined 55.2% to $86 million. 

The gross margin was 40.3%, up 160 basis points from Q3 2022. Adjusted EBITDA was $334 million versus $439 million last year.

Adjusted EPS of $0.21 beat the consensus estimate of $0.02.

Macy's held $364 million in cash and equivalents as of October 29, 2023. Operating cash flow for nine months totaled $158 million.

Inventory turnover, on a trailing twelve-month basis increased 1% Y/Y and up 16% to 2019.

Jeff Gennette, chairman and chief executive officer, said, "Looking forward we have strong continuity with Tony Spring transitioning to CEO in February and I am confident he and our leadership team will guide Macy's, Inc. to sustainable long-term profitable sales growth in the future."

Outlook: Macy’s sees FY23 comparable sales to be down 7% - 6% (prior down 7.5% - 6%). 

The company sees FY23 sales of $22.9 billion - $23.2 billion (prior $22.8 billion - $23.2 billion), against the consensus of $23.12 billion.

The company expects FY23 adjusted EPS of $2.88 - $3.13 (prior $2.70 - $3.20) versus the Street view of $2.77.

Price Action: M shares are trading higher by 9.99% at $13.86 on the last check Wednesday.

Photo Via Company