Macy’s remains under pressure in the stock market following negative Q3 earnings report

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Nov 21, 2019
Updated: Mar 11, 2020
  • Macy's missed the EPS, revenue, and same-store sales target for 2019's third quarter.
  • Warm weather and poor sales in stores of weaker shopping malls cited as reasons for missed targets.
  • Macy's stock dropped by more than 10% following the earnings report.
  • CEO Jeff Gennette is confident of the holiday plans that are likely to put the store back on track.

Following the Home Depot’s Q3 earnings report earlier this week, Macy’s announced its performance results for the third quarter on Thursday. As per the report, the American department store saw a decline in same-store sales for the first time in two years. Much like Home Depot, warmer weather in the third quarter was cited as the reason for the poor performance.

Macy’s Performance In The Stock Market This Year

The stock was last seen trading more than 10% down following the Q3 earnings report. Having opened at $14.50 on Thursday, it printed a high of $15 that was immediately followed by a sharp decline back to the opening level. Much of the loss, however, has been recovered with the share prices currently settling around $14.85.

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The overall performance of Macy’s in the stock market has been downbeat in the year 2019. Shares were trading around $31 at the start of the year and noted a year-to-date low of $14.30 in mid-September.

Analysts had previously forecasted $5.32 billion in revenue for Macy’s in the third quarter of 2019 based on data from Refinitiv’s survey. The actual figure for Q3 revenue came out to be a little shy of the forecast and was reported at $5.17 billion. Macy’s was expected to breakeven in terms of earnings per share (EPS) in 2019’s third quarter but instead printed a lower 7 cents of earnings per share. Same-store sales were expected to drop at 1% versus a much higher 3.5% noted in the third quarter.

Estimates For Fiscal Year 2019

Following the worse than expected results in Q3, the American department store has reduced its estimate for the fiscal year 2019. Same-store sales were previously estimated to drop at 1% (max) for the fiscal year 2019 which has now been increased to 1.5% (max). While the company was confident that the drop in net sales will remain flat in the full-year report, expectation has now risen to 2.5% drop (max) for net sales. EPS for full-year was previously anticipated at $3.05 (max) that has been curtailed to $2.77 (max) following the Q3 earnings report.

As per the sources, the figures for last year were significantly better than in 2019. Net sales were highlighted at $5.40 billion last year while net income was noted at $62 million. Macy’s representative cited poor sales at stores located in the weaker shopping malls as a prominent reason for missing the Q3 targets. Macy’s CEO, Jeff Gennette, however, remained optimistic and expressed confidence in the holiday plans that are likely to put the department store back on track.

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