Macy’s, Nordstrom cut profit views along with inventories

Aug 22, 2022, 4:41 PM | Updated: Aug 23, 2022, 3:05 pm
FILE - Shoppers walk into a Macy's department store Monday, Feb. 22, 2021, at Miami International M...

FILE - Shoppers walk into a Macy's department store Monday, Feb. 22, 2021, at Miami International Mall in Doral, Fla. Macy's reported fiscal second quarter, Tuesday, Aug. 23, 2022, that beat Wall Street estimates, but lowered its outlook as it faces a glut of inventory it needs to clear amid inflationary pressures are making shoppers pull back. (AP Photo/Wilfredo Lee, File)

(AP Photo/Wilfredo Lee, File)

NEW YORK (AP) — Nordstrom joined Macy’s Tuesday in cutting its annual outlook for profit and sales despite second-quarter results that topped Wall Street forecasts.

Both retailers are suffering from an affliction plaguing most of their competitors: A glut of unsold inventory that they’re resorting to pricing at deep discounts to move.

They are also cutting back on merchandise orders to match shopper demand. Almost every major retailer has said in recent weeks that shoppers are making fewer trips to the store and when they do, they’re looking for deals. Some are trading down to cheaper alternatives.

Kohl’s last week slashed its sales and profit expectations for the year, a result of its stepped-up price cutting to shed unwanted merchandise. Both Target and Walmart also said last week that shoppers are cutting back and sticking to essentials.

Soaring prices have forced families to become more cautious. They are doing without new clothing, electronics, furniture and almost everything else that is not absolutely necessary. And spending habits have shifted faster this year than anyone expected. After being cooped up at home during the pandemic, Americans seemed to shift almost overnight to spending on dinners out, movies or concerts, and travel.

“The consumer’s got some pretty sour news out there,” Macy’s CEO Jeff Gennette told The Associated Press Tuesday. “Inflation is tough.”

In a statement, Nordstrom CEO Erik Nordstrom noted that, while the Seattle-based company’s results were consistent with its previous outlook, customer traffic and demand weakened in late June, predominantly at Nordstrom Rack.

The shift in spending habits has left retailers with elevated inventories of products that have become difficult to move.

New York-based Macy’s has cut orders where it can to better sync with customer demand, but Gennette said inventory in some categories remains high. The company is cutting prices on seasonal goods, private label and pandemic-related merchandise like casual wear and home furnishings to clear it, he said.

However, according to Gennette, customers are not trading down, or substituting typical purchases with a cheaper brand. That phenomenon is rampant at retailers like Walmart and Kohl’s.

At Macy’s, customers at every strata with household income below $250,000 are cutting back proportionately, Gennette said. At its Bloomingdale’s stores, where medium household income is more typically $250,000 and above, spending has continued at a healthy pace.

Macy’s earned $275 million, or 99 cents per share, in the three-month period that ended July 30, or $1 if one-time charges are removed. That easily topped the per-share earnings of 86 cents that industry analysts had expected, according to a survey by FactSet.

Sales slipped roughly 1% to $5.6 billion, but that was also stronger than anticipated.

Yet compared with the same period last year, sales and profit have cooled.

Sales at stores opened at least a year fell 1.5%, or 1.6% including licensed businesses like cosmetics. In contrast, its upscale Bloomingdale’s stores enjoyed an 8.8% increase in same-store sales, or 5.8% gain including licensed businesses. Online sales fell 5% during the second quarter, compared to the year-ago period, but was up 37% compared with the same period in 2019.

In one more pandemic-related shift, Gennette said that store locations in downtown areas are bouncing back as more people return to the office. Those sales have yet to return to levels more common before COVID-19, however.

Uncertainly about what Americans will buy and what they want has made it difficult for retailers to figure out what is coming as the holiday season approaches.

The company said its outlook for the rest of the year is based on the “continued deterioration of consumer discretionary spending” and high levels of inventory, both at Macy’s and at other stores. Macy’s anticipates more price cuts and the need to “liquidate aged inventory” as the holiday season approaches.

Inventory levels increased 7% in the three-month reporting period compared with last year, but it’s down 8% compared with 2019.

Macy’s now expects sales to be in the range of $24.34 billion to $24.58 billion this year, down from its May guidance of between $24.46 billion and $24.7 billion. Macy’s expects per-share earnings of $4 to $4.20, down from earlier guidance of between $4.53 and $4.95 per share.

Meanwhile, Nordstrom reported that net income was $126 million, or 77 cents per share, in the three-month period ended July 30. That compares with $80 million, or 49 cents per share, in the year-ago period. Adjusted earnings was 81 cents per share. Total sales rose to $4.1 billion from $3.65 billion in the year-ago period.

Analysts were expecting 80 cents per share on revenue of $3.96 billion, according to FactSet.

Nordstrom now expects revenue to be up 5% to 7% for the year, down from 6% to 8%. It expects adjusted earnings per share to be $2.30 to $2.6O per share, down from $3.20 to $3.50 per share.

Macy’s shares rose nearly 4% or 70 cents per share, to close at $19.31 in regular trading. But Nordstrom’s shares fell more than 13%, or $3.14 to $20.06 in after-hours trading after it reported its results.

______

Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Britain's Home Secretary Suella Braverman arrives for day three of the Conservative Party annual co...
Associated Press

UK still backs Rwanda deportations despite legal challenge

BIRMINGHAM, England (AP) — Britain’s immigration minister said Tuesday that it’s unlikely any migrants will be sent to Rwanda this year under a contentious government plan, but vowed to press on with the policy and expand it to more countries. Home Secretary Suella Braverman said that “unfortunately,” a court challenge to the Rwanda plan would […]
1 day ago
FILE - A sign marks the entrance of the Micron Technology automotive chip manufacturing plant on Fe...
Associated Press

Schumer: Micron to bring microchip plant to upstate New York

NEW YORK (AP) — Micron, one of the world’s largest microchip manufacturers, is expected to open a semiconductor plant in New York, promising an investment of up to $100 billion and a plant that could bring 50,000 jobs to the state, the Senate’s top Democrat says. The announcement comes after Senate Majority Leader Charles Schumer, […]
1 day ago
Associated Press

Ukraine’s foreign minister pledges to export grain to Africa

DAKAR, Senegal (AP) — Ukraine’s Foreign Minister Dmytro Kuleba promised that his embattled country will do all it can to send more grain to Africa as he began his tour this week of the continent in Senegal. Ukraine will be sending “boats full of seeds for Africa,” Kuleba said after meeting with Senegal’s president and […]
1 day ago
Associated Press

US to require more rest between shifts for flight attendants

Airlines will be required to give flight attendants at least 10 hours off duty between shifts, one more hour than currently, under a rule announced Tuesday by the Federal Aviation Administration. Acting FAA Administrator Billy Nolen said that the extra hour of rest would contribute to safety. Congress directed the FAA in 2018 to increase […]
1 day ago
Associated Press

German tourist killed by gunmen near South African game park

JOHANNESBURG (AP) — South African police have launched a manhunt after a German tourist was shot and killed by gunmen near Kruger National Park in Mpumalanga province. The attack on Monday was by gunmen who sped away without taking any belongings from the tourist or three other travelers who were with him. The driver of […]
1 day ago
Associated Press

Florida deputy, one of department’s youngest, fatally shot

POLK CITY, Fla. (AP) — A 21-year deputy was fatally shot Tuesday while serving a warrant in central Florida, authorities said. The deputy was shot after entering a trailer in the early morning with three other deputies to serve a warrant on a suspect wanted for failing to appear on a felony drug charge, said […]
1 day ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
...

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!
...

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
Macy’s, Nordstrom cut profit views along with inventories