Macy's, Inc. (NYSE:M) reported stronger-than-expected sales and earnings in the second quarter but held guidance reflecting a cautious economic outlook.
“In the second quarter, we delivered better-than-expected top and bottom-line results,” said Jeff Gennette, chairman and chief executive officer.
“Our teams surgically implemented clearance markdowns and promotions to effectively clear spring seasonal receipts and ensure fresh assortments for the fall and Holiday seasons.”
The department store chain, which owns Bloomingdale’s, reported sales in the quarter to July 29 of $5.13 billion, down 8% on the year prior, but above expectations of $5.09, while adjusted diluted EPS of $0.26 was down from $0.99 a year ago, but ahead of forecasts of $0.13.
Store sales fell 8%, digital sales decreased 10% and like-for-like basis sales slipped 8.2%.
Gross margin fell to 38.1% from 38.9% with merchandise margin down 130 basis points, due to heightened levels of clearance markdowns and promotions needed to clear through spring seasonal product.
Despite the better-than-expected numbers, the firm held guidance "in light of ongoing macroeconomic pressures and uncertainty on when those will abate."
"Better-than-expected second quarter gross margin, SG&A and interest expense, and a lower annual share count, are expected to fully offset reduced annual credit card revenue and asset sale gain assumptions," Macy's said.
In pre-market trading, shares were little changed, down 0.5% at $14.66.