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01/11 16:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reveals mixed signals: improved traffic and ticket, strong category performances, and raised Q4 guidance are positives. However, gross margin compression due to tariffs, cautious consumer outlook, and reduced media network guidance are concerns. The Q&A section adds confidence with strategic positioning and credit business strength, but uncertainties around store closures and media guidance persist. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
Macy's, Inc. comparable sales 3.2% increase year-over-year, marking the strongest in 13 quarters. Growth was driven by Go-Forward Macy's, Inc. which grew 3.4%, and positive contributions from all nameplates.
Adjusted EPS $0.09, up from $0.04 in the prior year. This was driven by better-than-expected net sales, comparable sales, gross margin, and SG&A.
Net sales $4.7 billion, down 0.6% or $29 million year-over-year. The decline was attributed to the closure of 64 non-go-forward stores, which contributed $160 million in sales in the prior year. Excluding these closures, sales grew 2.9%.
Bloomingdale's comparable sales 9% increase year-over-year, marking its best performance in 13 quarters. Growth was attributed to strong brand partnerships and category performance in ready-to-wear, men's apparel, fine jewelry, shoes, and tabletop.
Bluemercury comparable sales 1.1% increase year-over-year, driven by dermatological skincare and expanded brand partnerships.
Gross margin 39.4% of net sales, slightly down from 39.6% in the prior year. Excluding a 50 basis point tariff impact, gross margin rate would have expanded by approximately 30 basis points.
SG&A expense $2 billion, down $40 million year-over-year. This decline was due to benefits from closed Macy's locations and cost containment efforts, partially offset by investments in the go-forward business.
Core adjusted EBITDA $273 million or 5.6% of total revenue, up from 4.2% in the prior year. This improvement was driven by better-than-expected sales, gross margin, and SG&A.
Inventory Up 0.7% year-over-year in dollar terms, reflecting tariff-related cost increases. On a unit basis, inventories were down.
Operating cash flow $247 million year-to-date, compared to an outflow of $30 million in the prior year. This improvement reflects disciplined cash flow management.
Free cash flow Outflow of $183 million year-to-date, compared to an outflow of $492 million in the prior year.
Capital expenditures $525 million year-to-date, down from $649 million in the prior year.
Shareholder returns $350 million returned to shareholders through $149 million in cash dividends and $201 million in share repurchases, including $50 million in the third quarter.
Introduction of new brands: Macy's introduced Rodd & Gunn, Reiss, Prada Beauty, and expanded Barbour, Mackenzie-Childs, and MFK.
Luxury brand expansion: Bloomingdale's added designer brands like Totême, TWP, Zimmermann, Victoria Beckham, Christian Louboutin, and Roger Vivier.
Luxury market growth: Bloomingdale's achieved a 9% comparable sales growth, its best in 13 quarters, and Bluemercury recorded a 1.1% growth.
Digital and omnichannel growth: Macy's digital sales, including its marketplace, contributed to overall growth, and omnichannel improvements were highlighted.
New distribution center: Opened a state-of-the-art distribution center in China Grove, North Carolina, incorporating automation, robotics, and AI to improve delivery speed and reduce costs.
Inventory management: End-of-quarter inventories were in line with expectations, with a compelling mix of newness across brands and categories for the holiday season.
Bold New Chapter strategy: Focused on three pillars: reimagining Macy's, accelerating luxury, and modernizing operations, which drove better-than-expected results.
Customer experience enhancement: Improved Net Promoter Scores and customer feedback, with initiatives like selling education and curated product assortments.
Consumer Spending Behavior: Consumers are becoming more discerning about how and where they spend their dollars, which could impact sales and revenue.
Tariff Impact: Tariffs have impacted gross margins, though mitigation efforts have been implemented. This remains a potential risk to profitability.
Store Closures: The closure of 64 non-go-forward stores has contributed to a decline in sales, which could affect overall revenue performance.
Economic Uncertainty: The guidance incorporates a cautious view of a 'choiceful consumer,' indicating concerns about economic conditions and consumer spending.
Inventory Management: While inventory levels are disciplined, any mismanagement could lead to overstock or stockouts, impacting sales and customer satisfaction.
Competitive Landscape: The company acknowledges the need to respond to changes in consumer demand and the competitive landscape, which could pose challenges to market share.
Supply Chain and Distribution: Although investments in automation and new distribution centers have been made, any disruptions in the supply chain could impact delivery timelines and costs.
Luxury Market Expansion: While expanding in the luxury market, there is a risk of not meeting the expectations of high-end consumers, which could affect brand reputation and sales.
Fourth Quarter Guidance: Net sales expected to be approximately $7.35 billion to $7.5 billion. Comparable sales projected to be down approximately 2.5% to flat, with go-forward comparable sales down 2% to flat. Core adjusted EBITDA as a percent of total revenue expected to be 9.4% to 10.1%. Adjusted EPS forecasted at $1.35 to $1.55.
Full Year 2025 Guidance: Net sales projected to be approximately $21.475 billion to $21.625 billion. Comparable sales expected to be flat to up 0.5%, with Macy's, Inc. Go-Forward comparable sales flat to up roughly 1%. Gross margin as a percent of net sales anticipated to be 37.7% to 37.9%. Adjusted EPS raised to $2 to $2.20. Core adjusted EBITDA as a percent of total revenue expected to be 7.5% to 7.7%.
Consumer and Holiday Outlook: The company remains cautious, incorporating a more choiceful consumer into its guidance for the remainder of the quarter. Early fourth-quarter performance is positive, but the majority of sales volume is still ahead. The company is confident in its mix of categories and brands to meet holiday demand.
Luxury Segment Growth: Bloomingdale's and Bluemercury are expected to continue their growth trajectory. Bloomingdale's plans to expand its distribution, increase digital penetration, and open additional small-format Bloomies and outlet locations. Bluemercury focuses on dermatological skincare and expanded brand partnerships.
Operational Enhancements: The new China Grove distribution center is expected to improve delivery speed, reduce costs, and support all product categories. This facility will initially support Macy's nameplate with plans to expand to other nameplates.
Dividends Paid: $149 million of consistent quarterly cash dividends were returned to shareholders in the third quarter.
Share Repurchase: $201 million of share repurchases were made, including $50 million of buybacks in the third quarter. Approximately $1.2 billion remains on the buyback authorization.
The earnings call summary presents a mixed picture. Financial performance shows lower sales but improved core adjusted EBITDA. Product development is positive, with new initiatives like the Reimagine 125 stores. Market strategy seems cautious due to macroeconomic uncertainties, and gross margin compression is expected. However, the company is optimistic about Q4 and confident in its competitive positioning. The Q&A reveals some concerns about consumer behavior and gross margin compression. Overall, the sentiment is neutral, with some positive aspects balanced by uncertainties and challenges.
The earnings call summary reveals mixed signals: improved traffic and ticket, strong category performances, and raised Q4 guidance are positives. However, gross margin compression due to tariffs, cautious consumer outlook, and reduced media network guidance are concerns. The Q&A section adds confidence with strategic positioning and credit business strength, but uncertainties around store closures and media guidance persist. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
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