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Department store and mall retail stocks are being rattled by Macy’s cautious guidance on the year.
Kohl’s Corporation (KSS), Dillard’s (DDS), Urban Outfitters (URBN), The Gap (GPS), Chicos FAS (CHS), The Children’s Place (PLCE), Victoria’s Secret & Co (VSCO), Foot Locker (FL), Lululemon Athletica (LULU) and Nordstrom (JWN) were among those stocks trading lower on Tuesday.
“We take a cautious view right now on the consumer,” Chief Executive Officer Jeff Gennette said in an interview on CNBC. In the second quarter, while the company beat estimates, “we did have some shortfalls when we looked at credit income.”
Potential headwinds also include persistent inflation, the return of student loan payments in October and the fact that consumers are spending more on services than on goods, Genette said.
The CEO said M is prioritizing prudence and liquidity.
“We’re working in the right direction because we are so committed to getting back to profitable growth,” he said.
The retailer reaffirmed its 2023 sales forecast of $22.8B to $23.2B and EPS of $2.70 to $3.20. Comparable-store sales are set to drop 6% to 7.5%.
For the second quarter, M reported non-GAAP EPS of $0.26, which beat the average analyst estimate by $0.12. Revenue of $5.13B beat by $20M.
Brick-and-mortar sales decreased 8% versus the second quarter of 2022 while digital sales dropped 10%.
Shares of M are down more than 10% on Tuesday morning.
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