Macy’s CEO Blames Warm Weather for Latest Earnings Miss

During the third quarter, Macy’s revenue and same-store sales growth fell short.

Macy’s reported its third-quarter earnings results on Thursday before market open and heading into it, no one was feeling too optimistic. The retailer has struggled for the past couple of years, and its stock is currently down 54%.

And unfortunately, Macy’s lowered the bar even further with its latest earnings report. The company beat investors’ expectations on earnings, but it fell short on sales and cut its full-year guidance. 

Here is an overview of the company’s third-quarter earnings report:

  • Earnings: 7 cents per share, investors expected the company to break even
  • Revenue: $5.17 billion, as opposed to $5.32 billion forecasted
  • Same-store sales: Sales dropped 3.5% whereas investors expected a 1% drop 

What happened during the third quarter?

Things went from bad to worse for Macy’s during the third quarter. The company fell short on nearly every goal post and didn’t really have a compelling reason for its latest earnings mishap.

Macy’s did manage to beat expectations when it came to earnings, but this isn’t saying too much. Investors were expecting the company to break even, and it’s earnings did come in at 7 cents per share. But a year earlier, the company’s earnings were 27 cents per share. 

And the company’s net sales fell 4.3% to $5.17 billion, and its comparable sales fell 3.9%. And Macy’s slashed its full-year guidance for same-store sales and earnings.

On a conference call with investors, CEO Jeff Gennette said an unusually warm fall was to blame for the company’s disappointing sales. He added that low international tourism and weak turnout at lower-tier malls contributed to the company’s poor performance as well. 

Can Macy’s turn things around?

A Macy’s turnaround is possible, but it’s unlikely if the company continues with its current strategy. Blaming warm weather for its poor sales is an odd strategy, especially considering that this wasn’t a problem experienced by other retailers. 
And Wall Street doesn’t seem to be too optimistic when it comes to the company. Not one analyst reviewing the stock recommends buying it. Macy’s is going to need to seriously re-evaluate its strategy if it hopes to turn things around in the future.