Macy's Ability To Achieve Revised Outlook Amid Weak Macro Environment Is Doubtful: Analyst

Macy’s, Inc. M shares are trading lower after the company reported a second-quarter revenue miss.

The fashion retailer reported second-quarter sales of $4.94 billion, missing the consensus of $5.12 billion, and adjusted EPS of $0.53, exceeding the consensus of $0.29.

The department store operator said it now anticipates 2024 net sales of $22.1 billion-$22.4 billion, which is lower than the $22.3 billion-$22.9 billion expected earlier and down from 2023 sales of $23.09 billion.

Goldman Sachs analyst Brooke Roach writes that Macy’s disappointing results and reduced full-year sales and comp forecasts are concerning.

Despite strong profitability and EPS protection, the slowing comp trends across all banners will likely worry investors, especially compared to other retail formats with stable comp trends, adds the analyst.

Roach says that the updated profit outlook includes slightly higher credit revenue and asset sale gains.

On today’s call, the analyst seeks further details on the extent of the slowdown across banners, including QTD insights as Macy’s progresses through the early back-to-school season.

The analyst says they seek to understand Macy’s confidence in achieving the revised outlook in a weaker macro environment, its stance on promotional intensity plans for improving inventory health, and opportunities for expanding First 50 initiatives, which have shown positive comps this quarter.

The analyst rated the company Buy with a price target of $23.

Macy’s stock has gained around 5% in the last 12 months. Investors can gain exposure to the stock via Invesco S&P MidCap 400 Pure Value ETF RFV and Invesco Exchange-Traded Fund Trust II Invesco S&P MidCap 400 Revenue ETF RWK.

Price Action: M shares are down 12.6% at $15.50 at the last check Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.