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Tuesday saw retailer Macy’s (M, $19.31) cut its full-year forecast, stating that it anticipates deteriorating consumer spending on discretionary items like apparel that will force the department store chain to use heavy markdowns to move items off shelves.
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The revision comes despite Macy’s posting better-than-expected results for its second quarter. Same-store sales, or sales from stores that have been open at least a year, fell 1.5% from the previous year. Analysts polled by FactSet expected a 2% drop.
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Earnings for the second quarter came in at $275 million, compared with $345 million a year earlier. Stripping out one-time items, adjusted earnings were $1 a share. Analysts had been expecting 86 cents a share. While revenue stood at $5.6 billion vs. $5.49 billion expected.
Why it matters
Soaring prices of gasoline and groceries have prompted Americans to curb spending on apparel and other discretionary items, hitting sales at retailers and driving up inventories. Retail rival Nordstrom (JWN, $23.2) also followed suit and cut its annual expectations amidst the slump. Executives said customers aren’t trading down to less expensive brands, but are being more selective about what categories they shop and taking advantage of widespread promotions.
