By Macy’s Inc (NYSE: M) raised its sales guidance for the full year on Wednesday. Shares of the department store chain are still down about 10% in premarket.
The retailer now expects its net sales to fall between $22.3 billion and $22.5 billion. Its previous guidance called for $22.1 billion to $22.4 billion.
Investors are receiving the company’s update as negative primarily because the number it’s forecasting still suggests a meaningful year-on-year decline from $23.09 billion in 2023.
Macy’s stock is down more than 25% versus its year-to-date high at writing.
Macy’s has concluded its expense investigation
Macy’s delayed reporting its quarterly earnings in full last month as it unearthed an accounting issue related to an employee who managed to hide over $150 million in delivery expenses over three years.
The retailer launched an independent investigation into the matter as well at the time.
On Wednesday, the New York listed firm shared the results of that probe, confirming no material impact on any of its previous financial releases.
Macy’s generated $4.74 billion in revenue in its third fiscal quarter – weaker than $4.78 billion that experts had forecast, as per a press release the company posted this morning.
Weakness in quarterly sales is contributing to a decline in Macy’s stock price as well on Wednesday.
Macy’s is yet to turn green in terms of sales growth
Macy’s also improved its comparable sales guidance for the year on Wednesday.
It’s now calling for that metric to be down 1.0% or remain flat versus a year ago – compared to up to 2.0% decline it had guided for earlier.
Nonetheless, investors remain concerned as Macy’s is yet to claw its way back into the green in terms of sales growth, making them question if the retailer has the ability to compete against discount stores and regain share from online giants like Amazon and Walmart.
Activists like Barington Capital also want Macy’s to lower its capital expenditures from 4.0% of total sales to under 2.0% and focus on shareholder returns instead.
Is Macy’s stock a value trap?
On Wednesday, Macy’s also committed to taking measures to make sure that accounting issues like the one it recently discovered won’t happen again.
“We’re strengthening our existing controls and implementing additional changes designed to demonstrate our strong commitment to corporate governance,” Tony Spring – the company’s chief executive said in a statement today.
Macy’s shares are currently trading near its year-to-date low but Wall Street analysts remain wary of recommending buying them on the sell-off.
Their median price target currently sits at $17 – only a smidge above the retail stock’s previous close.
Macy’s stock does, however, pay a healthy dividend yield of 4.16% at writing that makes it somewhat more attractive for the income investors.
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