Macy's forecasts upbeat annual profit on muted promotions; shares surge

[March 02, 2023]  (Reuters) -Macy's Inc posted better-than-expected holiday-quarter results and forecast annual profit largely above Wall Street estimates as the department store operator looks to cut back on massive promotions to protect margins, sending its shares up 13% in premarket trading. 

A woman carrying a Macy's bag walks in falling snow as a winter storm moves into the northeast of the United States, in Times Square in New York City, New York, U.S., January 26, 2021. REUTERS/Mike Segar

Like many other 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 said.

As a result the company took a much softer hit to its margins compared to peers such as Kohl's Corp, which posted a surprise quarterly loss and forecast downbeat profit on Wednesday.

Macy's said it expects adjusted full-year profit per share between $3.67 and $4.11, while analysts on an average had estimated $3.84, according to IBES data from Refinitiv.

The department store operator sees 2023 sales between $23.7 billion and $24.2 billion, compared to the average estimate of $24.29 billion.

Excluding items, the company posted fourth-quarter earnings of $1.71 per share, topping the average estimate of $1.57 per share.

(Reporting by Ananya Mariam Rajesh and Anne Florentyna Gnanaraja Sekar in Bengaluru; Editing by Anil D'Silva and Saumyadeb Chakrabarty)

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