Retailers offer their investors a retarded piece of coal.
Several top retailers came out with lackluster sales and earnings updates ahead of their full results in late February/early March. Overall, the mood in the reports is grim as consumers retreat to discretionary buying and retailers battle stubborn inflation and still-bloated inventory.
Here are three warnings that stand out on Mondays.
Macy’s (M) warned it sees sales between the low and mid forecasts for $8.16 billion to $8.40 billion. Analysts had expected sales of $8.31 billion, according to Yahoo Finance Data. Earnings are expected to be within the indicative range of $1.47-$1.67. Yahoo finance Data shows that analysts were betting on $1.60 per share. With this advance earnings announcement, Macy’s essentially issued a profit warning for the first half of 2023 in addition to telegraphing a less than stellar holiday season. While Macy’s inventory levels appear to be in good shape despite missed sales, expect the Street to cut its 2023 earnings estimates amid margin pressures and a more cautious consumer. The stock is likely dead money – with a downward bias – until we get evidence of a reacceleration in consumer spending (for Macy’s and other retailers, let’s hope that happens before the spring selling season).
Macy’s shares are down about 5% before market.
lululemon Inventory (lulu) fell about 10% party results are in shy of Wall Street’s super high expectations. Lululemon said it now expects net sales to be between $2.66 billion and $2.70 billion. The company’s previous guidance range was $2.605 billion to $2.655 billion. Analyst estimates stood at $2.67 billion in sales. Earnings for the fourth quarter are in the $4.22 to $4.27 range, revised down to the high end of $4.20 to $4.30. The Street forecasts a profit of $4.30.
Of most concern is that Lululemon, which is typically an anti-product markdown, appears to have driven its quarter by aggressive product markdowns – gross margins are expected to drop 90 to 110 basis points.
Chico’s (CHS), a women’s clothing retailer, also had a tough holiday season, especially with its high-end concept White House Black Market. The company now expects total net sales to be between $505 million and $515 million and diluted earnings per share to be between $0.02 and $0.00. Chico’s previously had fourth-quarter sales of $535 million to $555 million and profits of $0.07 to $0.10. Wall Street was modeling for $545 million in sales and a profit of $0.09
Shares of Chico’s fell more than 10% in premarket trading.
Abercrombie & Fitch: One of the few bright spots on Monday was specialty clothing retailer Abercrombie & Fitch. Shares jumped 4% in premarket trading as the company raised its revenue and margin outlook for the fourth quarter.
It should be noted that Abercrombie announced better results in the men’s sector of its namesake company, something the street was looking to see before becoming more constructive on the stock.
Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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