Macy's second quarter adjusted profit tops estimates amid clearance markdowns

Investing.com -- Macy’s (NYSE: M) has reported a decline in second-quarter adjusted earnings, as the department store chain's move to roll out discounts aimed at clearing spring collections weighed on top-line returns.

Adjusted diluted profit per share slipped to $0.26 during the 13 weeks ended on July 29, down from $1.00 in the same period last year. But the figure still topped Bloomberg consensus estimates for per share income of $0.14.

Net sales, meanwhile, dropped by 8% annually to $5.13 billion, with both demand at both brick-and-mortar locations and online decreasing.

"Other" revenue slumped to $150 million due in part to a rise in credit card delinquencies. Macy's noted that while it was expecting to see more shoppers fall behind on monthly credit card payments following a recent spike in interest rates, the speed of this increase in delinquencies has been "faster than expected."

"This negatively impacted second quarter results," Macy's said in a statement.

The company also flagged that it will take a "cautious approach on the consumer" throughout the rest of 2023 because of ongoing "macroeconomic pressures and uncertainty." It also reiterated its previously-lowered outlook for adjusted diluted earnings per share of $2.70 to $3.20 on full-year net sales of $22.8B to $23.2B.

Macy's slashed the forecast in June, citing a need to conservatively account for a slowdown in customer spending on nonessential items.

Shares in the company edged lower in choppy premarket U.S. trading on Tuesday.

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