Macy's Earnings: What to Watch
August 09 2017 - 8:29AM
Dow Jones News
By Suzanne Kapner
Macy's Inc., a bellwether for department store chains, is
scheduled to report second-quarter results before the market opens
on Thursday.
Here's what you need to know.
EARNINGS FORECAST: Analysts are expecting earnings of 46 cents a
share, according to FactSet, a big increase compared with 3 cents a
share a year ago, when asset impairment and store closing charges
weighed on results.
REVENUE FORECAST: Sales are expected to total $5.52 billion for
the three months ended July, a 6% drop from the $5.87 billion of a
year ago. Factored into the sales decline is the closing of roughly
100 stores.
WHAT TO WATCH:
SAME-STORE SALES: Macy's same-stores sales have declined in each
quarter since January 2015. While analysts are predicting another
drop -- consensus calls for a 3.3% decrease in the second quarter
-- that should be an improvement over the 5.2% decline in the first
quarter.
GROSS MARGIN: Macy's warned during its analyst day in June that
its second quarter gross margin rate would likely be 1 percentage
point below year ago levels. Analysts will be looking for color
around that figure. Did the extra discounting drive sales, or help
clear winter merchandise?
INVENTORY: Retailers typically want inventory changes to align
with sales trends. Merchandise inventories fell nearly 2% in the
first quarter compared with the year ago period, and analysts will
be looking to see whether they continued to shrink. Failure to
reduce inventory when sales decline could be a sign that Macy's is
sitting on too much unsold goods.
REAL ESTATE: A year ago Macy's disclosed plans to close 100
stores. Analysts will be listening closely for further updates on
additional store closings, as well as ongoing plans to unlock value
from its real estate. Analysts will also be looking for any
evidence that Macy's is able to retain customers after closing
stores by shifting them online or to other nearby locations.
(END) Dow Jones Newswires
August 09, 2017 08:14 ET (12:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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