It looks like it's time to break out the tiny violins for Macy's, as the department store giant announced on Friday that it expects its fourth-quarter sales to come in at the lower end of its forecast. CEO Jeff Gennette blamed a "deeper-than-expected lull in shopping" between major holidays for the disappointing numbers. In addition, Macy's warned that consumer spending will remain under pressure in 2023, particularly in the first half of the year. The company's forecast caused shares to fall 4.2% in extended trading, and rival retailers Nordstrom and Kohl's saw their shares drop more than 2%.
So what happened? According to Gennette, the periods between major shopping occasions such as Black Friday and Christmas saw "bigger-than-expected drop-offs in spending." This is despite Macy's efforts to better align its merchandise with the expected slowdown in demand. It seems that surging prices of food and gas led to a decrease in demand for non-essential products, resulting in deeper discounts and promotions to clear excess stocks of casual and athleisure apparel.
But don't worry, Macy's isn't throwing in the towel just yet. The company maintained its adjusted earnings per share forecast of $1.47 to $1.67, and Gennette assured us that they have planned their inventory mix and depth of initial buys accordingly to weather the storm of consumer pressure in the coming year. In the meantime, perhaps it's time to reconsider that purchase of that overpriced novelty sweater you've had your eye on.
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