Macy’s Set to Reveal Q3 Fiscal 2023 Earnings: Outlook and Considerations

Macy's Stock

Macy’s, Inc. (NYSE:M) is gearing up to announce its third-quarter fiscal 2023 results on Nov 16, prior to the opening bell, with expectations of a decline in both top and bottom lines compared to the year-ago fiscal quarter. The Zacks Consensus Estimate for revenues stands at $4,781 million, reflecting an 8.6% decrease from the reported figure in the prior-year quarter.

The consensus estimate for quarterly earnings per share has remained steady at a penny in the past 30 days, indicating a substantial decline of approximately 100% from the 52 cents per share earned in the corresponding quarter of the previous year. Macy’s demonstrated an impressive 100% earnings surprise in the last reported quarter, maintaining a trailing four-quarter average surprise of 78.8%.

Factors at Play

Soft consumer demand, exacerbated by an inflationary environment, diminishing consumer confidence, and other macroeconomic pressures, is expected to have negatively impacted Macy’s third-quarter fiscal 2023 performance. Efforts to optimize inventory levels through markdowns within the overstock categories, combined with the potential for an intensified promotional environment, may have exerted downward pressure on margins and the bottom line. Any deleveraging of selling, general, and administrative expenses could further contribute to the challenges faced by the company in the quarter under review.

In its last earnings call, Macy’s management projected net sales to be in the range of $4.75-$4.85 billion for the fiscal third quarter. The company expected adjusted earnings per share to range from a loss of three cents per share to earnings of two cents per share for the same quarter. Management anticipates a year-over-year improvement of at least 140 basis points in gross margin for the fiscal third quarter.

Despite these headwinds, Macy’s is anticipated to benefit from its solid execution of the Polaris strategy, robust omnichannel capabilities, a curated merchandise assortment, and initiatives aimed at providing customers with a seamless shopping experience. These factors may provide some level of support to Macy’s performance in the third quarter. Investors will be closely watching for insights into how the company navigates the challenging retail landscape and the effectiveness of its strategic initiatives.

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