Macy's today noted some caution in consumer spending during the Christmas period even as the department store operator posted a surprise quarterly profit and raised annual targets.
It pointed to a "more choiceful" consumer during the key shopping period as inflation pressures spending on non-essential goods, and forecast holiday-quarter profit largely below expectations, pushing its shares down nearly 7% in premarket trading.
"Consumers are more discerning about how and where they spend their dollars," said CEO Tony Spring on a post-earnings call, adding that while the company was "pleased" with the start of the holiday quarter, it was being prudent with its expectations.
The comments mark the first from a retailer after the critical Black Friday and Cyber Monday shopping period, which was driven by strong online sales, particularly from wealthy shoppers.
The company expects fourth-quarter adjusted earnings per share of between $1.35 and $1.55, compared with estimates of $1.55, according to data compiled by LSEG.
"It appears that they are striking a more cautious tone based on the guide," said Charles Grom, analyst at Gordon Haskett Equity Research.
US department store operators have invested heavily in refreshing their stores after several years of losing out to online retailers and off-price chains.
"While comparable store sales continue to improve, the performance gap with the broader apparel and beauty market remains material," said Steve Dennis, President of SageBerry Consulting.
On an adjusted basis, Macy's reported a surprise profit of nine cents per share, compared with estimates of a 14-cent loss.
Macy's expects 2025 net sales to be between $21.475 billion and $21.625 billion, above its previous forecast of $21.15 billion to $21.45 billion. It also sees annual adjusted earnings per share of $2 and $2.20, up from $1.70 to $2.05.
