Shares of department store chain Macy’s (M) - Get Report gained on Wednesday after the retailer reported a narrower-than-expected second-quarter loss and better-than-forecast same-store sales amid a rebound in consumers’ appetite for clothing and accessories, particularly online.
Macy’s posted an adjusted loss of $251 million, or 81 cents a share, less than half the $1.77-a-share loss analysts polled by FactSet. A year earlier, Macy's posted adjusted earnings of $88 million, or 28 cents a share.
The New York-based retailer, which also owns the Bloomingdale’s and Bluemercury department store brands, said sales at both brick-and-mortar registers and online totaled $3.6 billion, better than the $3.5 billion expected by analysts but down from $5.5 billion a year ago.
Same-store sales fell 34.7%, nearly twice the 18.7% drop analysts polled by FactSet had been expecting. However, that was offset by a 53% gain in digital sales, the company said. Inventory, meantime, was down 29% from a year ago, allowing the company to "exit the second quarter in a clean inventory position."
“We are encouraged by our second-quarter performance; however, we continue to approach the back half of the year conservatively,” CEO Jeff Gennette said in a statement, noting that the company’s immediate priority is “successfully executing Holiday 2020.”
Indeed, retailers are already gearing up for what is expected to be a holiday shopping season like no other, as consumers re-calibrate their spending priorities due to the pandemic and ensuing recession and also re-calibrate how they go about buying goods in person vs. online.
Macy’s rival Kohl’s (KSS) - Get Report last month also posted a narrower-than-expected second-quarter loss as consumers delved back in to buying goods, particularly online, but also made plain that the upcoming holiday shopping season will be critical.
While Kohl’s didn't provide forward guidance, it did say it expects to see customers begin their holiday shopping earlier this year, which should help bolster sales in the third and fourth quarters, though it still expects Covid-19 “to continue to impact our business.”
Shares of Macy’s were up 1% at $7.08 in trading on Wednesday. Earlier the stock was up more than 7% following its earnings release.