Macy's (M) stock pares premarket losses on plans to expand Nike product offering
(Updated - June 1, 2023 10:10 AM EDT)
Shares in Macy’s (NYSE: M) traded 3.4% lower in pre-market Thursday after the company was forced to cut its full-year outlook as “demand trends weakened further in our discretionary categories.”
Shares initially plunged as much as 15% on the earnings release. However, the stock recovered a majority of losses after CEO Jeff Gennette said on the earnings call that the retailer will offer an expanded Nike (NYSE: NKE) selection starting in October.
“We look forward to scaling our Nike partnership with additional locations in spring of 2024,” he said.
For the first quarter, Macy’s reported a profit per share of $0.56 on revenue of $5 billion, which compares to the analyst consensus for earnings of $0.46 per share on revenue of $5.03 billion. While revenue fell 7% year-over-year, the company’s comparable sales were down 7.9%.
“During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, strength of our inventory management and operational efficiencies,” said Gennette.
“We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories,” he added.
Macy’s cut the full-year forecast for EPS to a range of $2.70-3.20 from the prior $3.67-4.11. Revenue is now seen at $23B at the midpoint of the range, down from the prior $23.95B. Analysts were looking for EPS of $3.69 on revenue of $24B.
CFRA analyst Zachary Warring cut the price target by $8 to $19 per share on Hold-rated M shares.
"Macy's continues to battle long-term headwinds and even with its low valuation we see better options in retail," the analyst wrote in a note.
By Senad Karaahmetovic