Macy’s stock crashed on company’s weaker than expected earnings and disappointing full year guidance
On Wednesday, Macy’s, Inc. (NYSE:M) stock tumbled 14% to $40.84, after the company released its third-quarter earnings. It made a record for biggest single day decline since February 2009. The entity failed to meet earnings estimates due to reduction in expenditures by customers and strong dollar preventing tourists to shop on its stores. Year to date, the stock has slipped 28%.
Macy’s reported earnings per share (EPS) of $0.56, just slightly above the estimated EPS of $0.54. Net sales came in at $5.87 billion, missing the consensus estimate of $6.1 billion. The reported revenue has dropped 5.2%, as compared to the same quarter last year.
The corporation has witnessed disappointing revenues in nine out of past 10 quarters. Many analysts believe that the slowdown in the retail sales should be a great concern for all the brick and mortar retailers as consumers are moving away from physical store shopping.According to the business, its comparable store sales plummeted 3.6%, in contrast to analysts’ expectations of 0.2% growth.
Overall, the profit dropped to $118 million, or $0.36 per share, from $217 million or $0.61 it earned same quarter last year.
According to Macy’s chairman and CEO, Terry J. Lundgren, “We are disappointed that the pace of sales did not improve in the third quarter, as we had expected. Spending by domestic customers remained tepid, especially in key apparel and accessory categories. “
He further stated that the slowdown in purchases by foreign visitors continued to significantly impact company’s stores in tourist centers, which are some of Macy’s largest-volume and most profitable locations.
In the press release, the organization announced that it is reducing its earnings forecast for the full year 2015. It mentioned that it now projects earnings of $4.20-4.30 a share, excluding asset impairments, as compared to its previous forecast of $4.70-4.80 a share in earnings.
Macy’s also predicts that its same store sales will further drop 1.8% to 2.2%, as compared to previous guidance for flat sales.
Despite getting pressure from investors, the retailer revealed that it will not peruse splitting up its real estate asset as separate entity; instead it will continue to search for opportunities to redevelop or sell selected locations.
The departmental store chain announced in September that it will shut nearly 5% of its stores this year. There were stores that were closed due to the worldwide pandemic during 2020 and 2022.
We have many reviews of different brokers where you can operate with all the assets that we discuss in these articles. From all of those, we would recommend a few that we find are suitable for beginners and intermediate investors so you do not have to read all our reviews: Robinhood, Tastyworks, Firstrade, Interactive Brokers, and Webull.
As much as we have studied in this website technical analysis, I should not underestimate fundamental analysis. We have interesting articles that can be useful to understand how companies are behaving: how are their sales? are they investing in new plants? Are they divesting and splitting? This information can be helpful to perform fundamental analysis before investing.
We study assets more in terms of what are these companies doing in long-term investments, what happens with their management accounting and balances in a wide array of securities and markets.
Therefore, I can recommend you some articles.
We have studied investments from Netflix, new contracts signed by Orbital, SolarCity earnings report and their negotiation with Tesla for the acquisition of the Powerball battery, the problems that ARCH coal is facing, how IBM is investing in the treatment of the Zika virus, how Moon Express is planning to mine minerals in the moon, and how Citigroup is engaged in commodity trading.
We follow a lot Tesla here, from the fundamental analysis and from the technical as well. See how the Chevy Bolt and the Tesla 3 are dimensioning the evolution of the price of this shares and how this could affect technical analysis, and how the Autopilot functionality is working: the evolution of the Autopilot software has always influenced the prices of their stocks. Tesla Model S 70D is considered the “car of the century”, not by us of course, but we are interested to see how these awards affect the evolution of the stocks. Tesla and other companies signed an agreement so that autobraking became the standard in 2022. A trend in the automobile industry started by Mercedes Benz and Tesla, is having a platform to sell pre-owned vehicles: now General Motors is joining that trend as well.
We have studies how the stock slump of GoPro should be considered not only from the view of technical analysis. Also, check the functionality from Facebook, the “login approval” and if it really protects users or other interests. The reports from Volkswagen about their very low injury claims, how now other companies in China can use the name “IPhone” apart from Apple. We continue in China to learn about the Marketplace Alliance Program from Alibaba, and the joint investment in CloudFlare from Google Inc, Microsoft Corporation, Qualcomm, and Baidu.
About Google, a company we follow a lot here, I want to see how they have entered in the batteries market and how this will affect their current projects and the evolution of the stocks. Interesting are the Chrome updates to decrease CPU usage.
We discuss briefly how Oracle adressed the changes in the cloud-computing industry, why Morgan Stanley is optimistic after the pandemic and the Brexit, the divestment in Dell regarding Perot Systems, and the effects of the huge minimum wage rise in Costco. Chipotle is cutting the executive compensation, the issues that BP is facing, what happens with Macy´s earnings and how fundamental analysis can be done in those cases. About Apple, we analyze the effect of the launch of this product Apple Watch where sales performed very irregularly.
I am David, economist, originally from Britain, and studied in Germany and Canada. I am now living in the United States. I have a house in Ontario, but I actually never go. I wrote some books about sovereign debt, and mortgage loans. I am currently retired and dedicate most of my time to fishing. There were many topics in personal finances that have currently changed and other that I have never published before. So now in Business Finance, I found the opportunity to do so. Please let me know in the comments section which are your thoughts. Thank you and have a happy reading.