What happened
Shares of Macy's (M 0.44%) were down 13.7% as of 3:15 p.m. ET Tuesday, according to data provided by S&P Global Market Intelligence, after better-than-feared quarterly results from the iconic department store chain were overshadowed by conservative forward guidance.
So what
On the former, Macy's second-quarter net sales declined 8.4% year over year, to $5.13 billion, translating to non-GAAP (adjusted) net income of $71 million, or $0.26 per share (down from $1 per share in the year-ago period). Analysts, on average, were expecting adjusted earnings of only $0.14 per share on slightly lower revenue of $5.11 billion.
Underlying Macy's lower revenue was an 8% year-over-year decline in brick-and-mortar store sales, and a 10% drop in digital sales.
Still, Macy's Chairman and CEO Jeff Gennette noted the company used "surgically implemented clearance markdowns and promotions" to effectively clear spring seasonal merchandise in time for the fall and holiday seasons.
Now what
Despite its relative outperformance in the second quarter, however, Macy's merely reiterated its previous full-year outlook calling for net sales of $22.8 billion to $23.2 billion, including a 7.5% to 6% drop in comparable-store sales, with adjusted earnings per share of $2.70 to $3.20.
Management says uncertainty over when ongoing macroeconomic pressures will eventually fade is to blame.
In the end, it's obvious that the market held high hopes for a beat-and-raise performance from Macy's this quarter. Given the reiteration despite the beat, however, and with shares up around 8% from their June lows going into this report, it's no surprise to see this leading retail stock revisiting those lows today.
