Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Why Macy's Inc Stock Is Falling Today

What happened

Shares of Macy's (NYSE: M) were getting squeezed, after the company reported better-than-expected earnings this morning but delivered guidance that was not enough to offset ongoing pessimism around the industry.

The stock got swept up in a broader retail sell-off and was down 9.3% as of 11:32 a.m. EDT.

Image source: Macy's.

So what

Macy's shares were actually up in pre-market trading as investors initially responded positively to the report. The venerable department store chain said comparable sales were down 2.8% on an owned basis, and 2.5% including licensed departments, both of which were an improvement from the first quarter. Overall sales declined 5.4%, from $5.87 billion to $5.55 billion, as the company also closed down stores, but that result edged out estimates at $5.52 billion.

On the bottom line, adjusted earnings per share slipped from $0.54 to $0.48, still topping expectations at $0.46.

CEO Jeff Gennette said that performance in women's shoes and jewelry was strong, and that the company's off-price Backstage concept is showing promise. He also said he expected the launch of a new loyalty program to improve the department store's sales trend in the second half of the year.

Now what 

The slide in Macy's stock seemed to owe more to the general malaise in the sector than to the report, as several other department store stocks were down sharply. A comment on the earnings call that management had no new real estate updates also pushed the stock lower.

The company maintained its full-year guidance, calling for adjusted earnings per share of $2.90 to $3.15, excluding real estate gains. In addition, the company guided for comparable sales to continue improving in the second half of the year.

All in all, this was a decent report considering expectations, but the sell-off shows how hard it will be for department stores to regain investor faith.

10 stocks we like better than Macy's
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Macy's wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.