Macy’s lowers its revenue guidance for the holiday quarter

Macy’s Inc (NYSE: M) tumbled in extended hours on Friday after the retailer warned of a potential softness in its current quarter results.

Macy’s hints at consumer weakness

The department store chain had guided for $1.47 to $1.67 of per-share earnings (adjusted) for its holiday quarter on $8.16 billion to $8.40 billion in revenue.

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On Friday, it reiterated the same range for its quarterly profit but said revenue was now expected to come in between $8.16 billion to $8.28 billion instead.

Based on current macroeconomic indicators and our proprietary credit card data, the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly.

Versus its slow in late September, the Macy’s stock is still up more than 35%.

Gross margin to be in line with guidance

Macy’s is expected to report its fourth-quarter earnings in early March. A year ago, it had $8.67 billion in revenue and $2.45 of adjusted per-share earnings in Q4. CEO Jeff Gennette added in the press release:

Black Friday/Cyber Monday sales were in line with expectations, while the week leading up to and following Christmas were ahead. However, lulls of the non-peak holiday weeks were deeper than anticipated.

Still, the Cincinnati-headquartered firm left its outlook for gross margins unchanged. End-of-quarter inventories, it revealed, were expected slightly below last year.

Despite the retail news, Wall Street sees upside in Macy’s stock to about $24 on average. That represents more than a 10% upside from here.