US-based departmental store company Macy’s reported a solid second quarter with net sales and earnings better than expectations. While revenues were lower by 0.8% YoY to $5.6bn, they beat expectations of $5.5bn. Bloomingdale and Bluemercury, both owned by Macy’s saw their comparable sales up 8.8% and 7.6% YoY. Net income declined 20% YoY to $275mn on the higher cost of sales and expenses with EPS at $1/share, higher than polls of $0.86/share. However, Macy’s digital sales decreased 5% YoY. Digital penetration was 30% of net sales vs. 32% in last year. Credit card revenues rose 3.5% to $205mn. 43.9mn active customers shopped the Macy’s brand in the last one year, 7% higher YoY. Inventory was up 7% YoY, and in certain categories they were elevated due to reduced YoY sales and a slowdown in consumer discretionary spending. As of July 30, the company had cash and cash equivalents of $300mn vs $2.1bn the previous year with long term debt at $3bn. The retailer had repaid $1.1bn in debt in the last one year. The company lowered its remaining 2022 outlook due to increased macroeconomic pressures, deterioration of consumer discretionary spending and a high level of inventory within the industry. Net sales guidance was lowered to $24.3-24.6bn from $24.5-24.7bn and adjusted EPS was guided for at $4-4.2/share for 2022. Adjusted EBITDA margin is expected to be at 10.5% levels.
Macy’s 4.5% 2034s are up 0.38 points 73.1, yielding 7.97%.