Macy's stock tumbles as delivery costs overshadow sales beat
Macy’s shares tumbled 16% on Wednesday, even after the retailer posted stronger quarterly sales than expected and raised its full-year forecast.
The company said delivery expenses will put downward pressure on gross margins in the fall season. During a conference call with analysts, Chief Financial Officer Paula Price said Macy’s gross margin for the period is expected to fall below year-ago levels.
In addition to margin concerns, the selloff may have been driven by investors locking in their profits on the company’s stock, which was already up 66 percent on the year. Since hitting a seven-year low in November, Macy’s shares have more than doubled in value.
Shares closed about 16.1 percent lower at $35.15.
Macy’s has closed hundreds of stores and invested in its e-commerce business amid a decline in foot traffic at brick-and-mortar retailers. The company also updated its loyalty program earlier this year, opening it up to non-credit card holders. Those changes will contribute to higher delivery expenses in the third quarter.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| M | MACY'S INC. | 15.97 | +0.08 | +0.50% |
Macy’s reported a surprise increase in comparable sales during the second period. Sales at locations open more than 12 months were up 0.5 percent, while analysts expected a 0.9 percent decrease.
Net income climbed to $166 million compared to $111 million in the same period a year ago, and adjusted per-share earnings hit 70 cents. Net sales dropped 1.1 percent to $5.57 billion. Analysts had forecast earnings of 51 cents a share on sales of $5.55 billion.