Macy’s stock soars after earnings beat as consumers bought gifts, men’s tailored apparel and beauty products

The company
M,
-0.15%
posted net income of $508 million, or $1.83 a share, for the quarter to Jan. 28, down from $742 million, or $2.44 a share, in the year -earlier period. Adjusted per-share earnings came to $1.88, ahead of the $1.58 FactSet consensus.

Sales fell to $8.264 billion from $8.665 billion, but were also ahead of the $8.234 billion FactSet consensus. Sales were driven by strength in gifting and other special occasion categories, including beauty, men’s tailored apparel, dresses and shoes, while sales in active, casual and soft home declined. The categories that declined were much in demand during the peak pandemic period, when many people were working from home full time.

Same-store sales at owned store fell 3.3% and fell 2.7% at owned plus licensed stores, but were up 3.1% and 3.3% versus 2019, before the start of the pandemic.

Gross margin fell to 34.1% from 36.5% a year ago, which the company attributed to planned markdowns and promotions, which were higher than a year ago, when inventory constraints led to low promotional activity.

Net credit card revenue fell to $262 million, down $2 million from a year ago and equal to 3.2% of sales.

Macy’s is now expecting fiscal 2023 adj. EPS of $3.67 to $4.11 and sales of $23.7 billion to $24.2 billion. The FactSet consensus is for EPS of $3.78 and sales of $24.2 billion.

The stock has fallen 22% in the last 12 months, while the S&P 500
SPX,
-0.47%
has fallen 10%.