Macy’s fails to sustain its 6% growth in share prices following an optimistic Q4 earnings report

Macy’s revealed its quarterly earnings report on Tuesday that suggested stronger than expected financial performance in the fourth quarter. The company attributed upbeat results with the last-minute shoppers that fueled higher sales in the Christmas period.  

In premarket trading, Macy’s stock was seen trading 6% higher. But the gain turned out to be unsustainable and share prices opened flat on Tuesday. At the time of writing, Macy’s is exchanging hands at $14.60 in the stock market that marks just over 10% decline in 2020 so far. The American department store failed to perform well in 2019 either with an annual loss of around 40%.

CEO Jeff Gennette of Macy’s commented on the Q4 earnings report and reiterated that the company remained under pressure last year but its performance in the holiday quarter did show some signs of recovery.

Macy’s Results Versus Analysts’ Estimates For The Fourth Quarter

According to Refinitiv, analysts were expecting Macy’s to print $8.32 billion in revenue in the fourth quarter. In terms of earnings, their estimate was capped at $1.96 per share. Experts had also forecast a 0.9% decline in Macy’s same-store sales.

In its report on Tuesday, the company declared to have generated a slightly higher $8.34 billion in revenue in the recent quarter while it beat the analysts’ estimate for earnings by a significant margin at $2.12 per share. Macy’s same-store sales in Q4 also saw a smaller decline of 0.5%. In the fourth quarter of 2018, same-store sales had posted a 0.7% increase.

The company also highlighted its net income at $340 million in 2019’s fourth quarter versus a much higher $740 million in the same quarter last year. In terms of sales, the decline was noted from $8.46 billion in 2018’s Q4 to $8.34 billion in the recent quarter.

CEO Gennette Expressed Confidence In Better Performance In Fiscal 2020

CEO Gennette expressed confidence in transitioning to better financial performance this year. In its guidance for fiscal 2020, Gennette said that the company now expected $23.6 to $23.9 billion in net sales and a much lower 2.5% to 1.5% decrease in its same-store sales. On the earnings front, the company estimated $2.45 to $2.56 per share (adjusted) in fiscal 2020.

The recent quarter marked the first time for Macy’s to report a decline in its same-store sales in 2 years. The company blamed weaker mall traffic and warmer weather to have weighed on its same-store sales in the fourth quarter.