Macy’s (M) earnings Q4 2022

People wait in line to enter Macy’s department store during Black Friday in New York City on November 25, 2022.

Yuki Iwamura | AFP | Getty Images

Macy’s shares surged Thursday, as the company said it drew holiday shoppers looking for gifts and held the line on promotions.

But the department store operator, which includes higher-end banner Bloomingdale’s and beauty chain Bluemercury, said it is still planning for a choppier year ahead.

Macy’s said it expects net sales to decline in a range of 1% to 3% in the fiscal year compared with 2022, which would translate to between $23.7 billion to $24.2 billion. It said it expects its adjusted diluted earnings per share will range from $3.67 to $4.11.

In the holiday quarter, CEO Jeff Gennette said the company was “competitive but measured in our promotions, took strategic markdowns and intentionally did not chase unprofitable sales.”

He said Macy’s is focused on refreshing its private brands, opening more off-mall stores and growing its luxury business and online marketplace.

Here’s how Macy’s did for its three-month period that ended Jan. 28 compared with what analysts were anticipating, based on Refinitiv estimates:

  • Earnings per share: $1.71 vs. $1.57 expected
  • Revenue: $8.26 expected vs. $8.26 billion expected

Net income for the fourth quarter fell to $508 million, or $1.83 per share, from $742 million, or $2.44 a share, a year earlier. The company reported adjusted per share earnings of $1.88. Excluding a tax benefit in the quarter, adjusted earnings per share come out to $1.71. 

Comparable sales on an owned-plus-licensed basis were down 2.7% during the period from a year ago, but up 3.3% versus the fourth quarter in 2019.

The company reported adjusted earnings per share of $1.88. Excluding a tax benefit, it delivered adjusted earnings per share of $1.71, higher than the $1.57 that analysts expected, according to Refinitiv.

Macy’s results signal that sales patterns picked up in the final weeks of the quarter. In early January, the company had shared early holiday numbers. At the time, it said it expected its sales to come in on the lighter side of expectations. The company said it had noticed customers watching their spending more carefully and buying fewer items for themselves while shopping for gifts in November and December.

Macy’s has stood out from other retailers in another way: It hasn’t coped with the same glut of unsold goods. At the end of the fourth quarter, its inventory was down about 3% versus a year ago and down about 18% compared with 2019.

That meant the retailer had less merchandise to sell at a deep discount, even as it had to compete with retailers running lots of sales.

Bloomingdale’s and Bluemercury have been the strongest parts of the company’s business. Bloomingdale’s comparable sales rose 0.6% year over year on an owned-plus-licensed basis, as shoppers bought dressy clothing and beauty merchandise. Bluemercury’s comparable sales rose 7.2% on an owned basis, as shoppers sought newer and more colorful makeup along with skincare merchandise.

At Macy’s stores and on its website, the company said it noticed “the impacts of macroeconomic pressures” in the fiscal fourth quarter. Yet it said it saw strength in sales for gift-giving and occasion-based items like men’s tailored apparel, dresses and beauty merchandise. Sales of activewear, casual clothing and soft home goods declined versus the prior year.

As of Wednesday’s close, Macy’s shares are down about 1% so far this year. Its stock trails the S&P 500, which rose by about 3% during the same period. The company’s shares closed at $20.43 on Wednesday, bringing Macy’s market cap to about $5.5 billion.

Read the full Macy’s earnings release.

This story is developing. Please check back for updates.