Macy's has today posted better-than-expected results for the Christmas quarter and forecast annual profit largely above estimates as the department store chain looks to cut back on promotions to protect margins, sending its shares up 5%.
Like many retailers, Macy's offered steep discounts during the holiday season to get rid of excess inventory and attract inflation-weary consumers.
But chief executive Jeff Gennette said those promotions were "competitive but measured."
"We took strategic markdowns and intentionally did not chase unprofitable sales," Gennette added.
As a result, Macy's took a much smaller hit to its margins, which fell 2 percentage points to 34.1%, compared with peers such as Kohl's Corp, whose margins took a 10 percentage point hit.
With the extra inventory mostly gone, Macy's is just going to be more cautious with the way they offer promotions, M Science analyst Matthew Jacob said.
Stubbornly high inflation and an uncertain economic environment have forced retailers such as Walmart and Target to make cautious forecasts for the year.
Macy's said it expects adjusted full-year profit per share between $3.67 and $4.11, while analysts on average had estimated $3.84, according to IBES data from Refinitiv.
The department store operator, however, sees 2023 sales between $23.7 billion and $24.2 billion, compared with the average estimate of $24.29 billion.
