Macy’s Needs No Help to Fall Flat on Its Face
The retailer’s guidance cut has little to do with looming tariffs. It’s just bad at selling clothes.
Macy’s fails the most basic task of being a department store.
Photographer: Victor J. Blue/BloombergMacy’s Inc.’s continuing missteps put a turnaround even further out of reach.
The department store giant said on Wednesday that comparable sales in the second quarter rose a meager 0.2% from a year earlier, or 0.3% including licensed departments. Earnings in the period fell well short of analysts’ estimates and Macy’s said it resorted to markdowns to clear inventory. The weak performance forced the company to cut its 2019 adjusted earnings guidance. It now expects to earn $3.05 a share at most this year, down from an earlier prediction for as much as $3.25.
Macy’s shares were slammed on Wednesday, tumbling more than 17% in early trading. No wonder: the guidance cut doesn’t even reflect the potential impact from tariffs. After initially planning to slap 10% tariffs on $300 billion of mostly consumer-linked Chinese goods by Sept. 1, the Trump administration announced this week that it would delay levies on some items — including certain kinds of apparel and footwear — until mid-December. That delay doesn’t offer any durable relief for the retail industry, though. If Macy’s had to slash its outlook even before factoring in policy curve balls from Washington, investors are right to be worried about what direction things go from here.