Macy’s will report its third-quarter earnings on Thursday. How the results are may well affect the moods of investors as they watch the retailer’s Thanksgiving parade just a few days later.
The year has not been kind to the retail giant. Macy’s stock has lost nearly half its value and is at its lowest level since the financial crisis. It’s among the worst of a beaten-down crowd: J.C. Penney, Kohl’s, and Nordstrom.
Struggling from e-commerce competition and hurt by tariffs from the trade war, Macy’s revenues have trailed last year’s, and its margins have narrowed as it heavily discounted to clear excess inventory. In the second quarter, earnings were almost half Wall Street expectations, driving the stock down 13% on the day. Analysts don’t expect Macy’s to make a third-quarter profit and see same-store sales falling for the first time in two years.
Macy’s has very little to be thankful for right now. Stock market and consumer confidence are both near cycle highs, and overall retail sales are expected to be strong for the holidays. But that probably won’t save the retailer from its misery. Despite robust holiday sales in 2017 and 2018, Wall Street didn’t give the shares of Macy’s and its peers much of a boost as investors remained cautious about weak earnings and the future of department-store retail.
Macy’s recently lowered this year’s profit outlook to $2.85-$3.05 per share. The Street is even gloomier, anticipating only $2.70—a third less than last fiscal year. Macy’s can only hope for a holiday miracle.
Next Week
Monday 11/18
The National Association of Home Builders releases its Housing Market Index for November. Consensus estimates are for a 72 reading, up from October’s 71.
Tuesday 11/19
Alcon, Home Depot , Medtronic , TJX , and TransDigm Group report earnings.
Oracle holds its annual shareholders meeting in Redwood City, Calif.
ConocoPhillips and Qualcomm host analyst meetings in Houston and New York, respectively.
The Census Bureau reports residential construction data for October. Economists forecast a seasonally adjusted annual rate of 1.39 million building permits and 1.32 million housing starts. This compares with 1.39 million and 1.26 million in September, respectively.
Wednesday 11/20
L Brands, Lowe’s , NetEase, and Target report quarterly results.
The Federal Open Market Committee releases minutes from its previous monetary-policy meeting at the end October.
Salesforce.com holds its annual investor day in San Francisco.
Clorox and News Corp hold their annual shareholders meetings in Pleasanton, Calif., and New York, respectively.
Thursday 11/21
Gap, Intuit, and Ross Stores hold conference calls to discuss earnings.
Ameriprise Financial hosts its 2019 investor day in New York.
Liberty Media holds its annual investor meeting in New York. Five Liberty controlled companies will give presentations, including Live Nation Entertainment, Sirius XM Holdings, and TripAdvisor.
The National Association of Realtors reports existing-home sales for October. Consensus estimates are for a seasonally adjusted annual rate of 5.5 million, up 2.2% from September’s 5.4 million.
Friday 11/22
Foot Locker and J.M. Smucker report quarterly results.
IHS Markit releases its Composite Purchasing Managers Index for November. Economists forecast a 51.9 reading, up from October’s 50.9, which was just above the expansionary level of 50.
The Federal Reserve Bank of Kansas City releases its Manufacturing Survey for November. Expectations are for a reading of +1, up from October’s -3. The survey has produced negative readings for four consecutive months, suggesting contraction in the region’s manufacturing sector.
Write to Evie Liu at evie.liu@barrons.com
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November 16, 2019 at 09:37AM
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Beleagured Retailer Macy’s Needs a Holiday Miracle - Barron's
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