Macy’s And Kohl’s Report 3rd Quarter 2022 Earnings

Business for Macy’s and Kohl’s (as well as other retailers) slackened at the end of October and into November. While both companies have solid plans for the holiday fourth quarter, they both announced that they would not guide estimates for the fourth quarter as well as estimates for the full 2023 year.

It is no surprise. While retail sales have slackened drastically in October and the beginning of November, consumers are spending a lot of money for their travel plans. Airlines are forecasting a heavy travel season. While gasoline prices have come down from their high, food is still very expensive. It looks like the consumer has travel plans in mind, and is likely to spend less for the holidays at home.

Maybe the lower gas pries have convinced many consumers that there will not be a recession. However, higher interest rates suggest it will happen. Companies like AmazonAMZN
lays off 11,000 employees, Meta will lay off 11,000, and Twitter 3,700, MicrosoftMSFT
1000, Robinhood 23%, Salesforce many cut thousands associates – cutting expenses before any recession may hit. It may also be that their forecasters see a recession on the horizon. Certainly, good holiday sales will be need for the economy to sustain itself. Brittain seems to be in a recession already.

Macy’s Inc. reported fully diluted $0.39 earnings per share for the third quarter. This compares to diluted earnings per share of $0.01 in the third quarter of 2021. Net sales of $5.2 billion was down 3.3% from the sales reported in the third quarter of 2021. Digital sales decreased 9% from 2021 but were up 35% versus the third quarter of 2019. Comparable sales were down 3.1 % on an owned basis and down 2.7% on an owned-plus-licensed basis. However, Macy’s (nameplate only) comparable sales were down 4.4% on an owned basis and 4.0% on an owned-plus licensed basis. Bloomingdale’s comparable sales on an owned basis were up 5.3% and on an owned-plus-licensed basis were up 4.1%. Bluemercury comparable sales were plus 14.0%.

Kohl’s reported $0.82 diluted earnings per share for the third quarter. This compared to $1.65 per share for third quarter 2021. Net sales were $4.3 billion compared to $4.6 billion last year. That is a decrease of 7.2%. from last year. Comparable store sales decreased 6.9%. The company has a search committee to search for a new CEO. Board member Tom Kingsbury has agreed to be the interim CEO during the transition period.

Kohl’s inventory is 33.8% higher than last year. Some new inventory could be the new Sephora merchandise, or it could be merchandise that did not sell during one of the sales. On the other hand, Macy’s inventory was up only 10% and should not be a major concern.

POSTSCRIPT: The fight for the shopper’s dollar has already begun and will be very intense on Black Friday (November 25), Cibber Saturday and Cibber Monday (November 26 and November 28.) It will be the battle of the giants. It will be a tense period for retailing. There will be few, if any, reorders. Shoppers might as well buy what they see.