Macy’s, Inc. (NYSE: M) experienced a remarkable rally on Friday, with its shares surging by 12.2%, defying the struggling retailer’s decision to slash its full-year profit forecast. The company attributed the downward revision to “weakened demand trends” expected during the summer months.
Macy’s Slashes Forecast
Macy’s, Inc. (M) reported a 48% drop in adjusted earnings, amounting to 56 cents per share. In addition, the company experienced a 7% decline in sales, totaling $4.98 billion for the first quarter. These results, released on Thursday, fell short of expectations set by FactSet analysts who predicted earnings of 45 cents per share on $5.013 billion in sales.
Comparable sales for the period also saw a decline of 7.2%, surpassing analyst forecasts for a 5.5% decrease.
Although Macy’s exceeded Wall Street estimates, the company remains cautious about the future. It has revised its full-year outlook, expecting the macroeconomic conditions for consumers to worsen. Macy’s expects net sales for the year to range from $22.8 billion to $23.2 billion, down from its previous forecast of $23.7 billion to $24.2 billion.
In addition, Macy’s has adjusted its earnings outlook to $2.70 to $3.20 per share, down from the previous range of $3.67 to $4.11 per share.
FactSet predicts that full-year earnings will reach $3.69 per share with sales totaling $23.73 billion.
Following the announcement, Macy’s shares initially dropped 3% in early trading but later rebounded, gaining 1.2% on Thursday. However, in premarket trading, shares fell by as much as 10%. Overall, Macy’s stock has experienced a significant decline of 25% year to date.