Macy's (M) is scheduled to report results of its third fiscal quarter before the market open on Thursday, November 21, with a conference call scheduled for 8:00 am EDT. What to watch for:
1. TURNAROUND: Last year, Macy's CEO Jeff Gennette said he was "committed" to stabilizing its brick and mortar business, and that customers had been confused by "very complex" pricing. Macy's updated its strategic priorities for 2019 in February, saying it plans to renovate 100 more stores and further expand its selection online. Macy's also said it would invest in what it dubbed "destination businesses," dresses, fine jewelry, men's tailored apparel, women's shoes, beauty, and "big ticket." Further, Macy's plans to double the number of in-store pop-up market locations, build out its virtual reality furniture capabilities and slim down the upper management ranks. Beginning this year, the company expects the restructuring efforts to generate annual savings of $100M. In September, Macy's said it sees opportunities to reduce "ineffective markdowns and to move towards more personalized, targeted promotions for each customer." Macy's executives spoke of using analytics to target individualized promotions as part of its plans to cut costs by $400M to $550M while also improving working capital by approximately $100M over the next 2 to 4 years.
2. GUIDANCE: In August, Macy's lowered its forecast for fiscal 2019, including adjusted earnings per share to $2.85-$3.05 from $3.05-$2.35, but backed its FY19 revenue growth guidance of "approximately flat," its owned SSS growth guidance of flat to up 1% and its owned plus licensed SSS growth guidance of flat to up 1%. Macy's said at the time that it was "confident" in its annual SSS guidance and predicted its Q4 comp would be "meaningfully greater" than Q3. Credit Suisse analyst Michael Binetti said he thinks structural challenges are poised to accelerate in 2020 and thinks consensus estimates for 2020 are likely to be revised significantly lower. Binetti added that SSS trends for Q3 are likely running below Street estimates and guidance to a big Q4 SSS inflection is "tough to embrace" without downside gross margin risk.
3. COMPETITIVE LANDSCAPE: Macy's has been faced with competition from fast-fashion retailers like H&M, as well as an increase in online shopping on Amazon.com (AMZN). Beginning in October, Macy's made same-day delivery available in 30 markets nationwide on orders of $75 or more without the company's usual $8 fee, Retail Dive reported.
Macy's
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