by Ian Harvey
November 21, 2019
Macys reported a positive earnings surprise in the third quarter; but net sales fell short for the fourth quarter in a row and comparable sales slid after seven straight quarters of growth.
“Stock Options Made Easy” “Earnings Predictions” members are now up 182% potential profits.
Are you missing out on these profits? Why not join us and benefit as well!
And see what we are considering for future trades on Macy's Inc.!
Macys shares slid 5% in pre-market trade
Thursday, after the department store chain missed sales estimates for the third
quarter and lowered guidance for the full year. But, after a miss in the second
quarter of fiscal 2019, Macy’s
reported a positive earnings surprise in the third quarter posting adjusted
earnings of 7 cents a share that surpassed the Consensus Estimate of 1 cent.
However, the quarterly earnings fell sharply from 27 cents reported in the
Sales fell to $5.173 billion from $5.404 billion, below the $5.321 billion consensus. Same-store sales were down 3.5%, worse than the consensus for a decline of just 0.5%. "While we anticipated a negative comp as we were lapping a very strong third quarter last year, the sales deceleration was steeper than we expected," Chief Executive Jeff Gennette said in a statement.
Also, sales were impacted by the late arrival of bad weather, weak tourism and weaker-than-expected performance at lower-tier malls. "We also experienced a temporary impact on our e-commerce business due in part to work on the site in preparation for the fourth quarter," he said, adding that the work has been completed.
Shares closed down 2.33%, down $0.35, at $14.67 on the stock market today.
Shares have fallen 50% in 2019, while the S&P 500 has gained 24%.
“Stock Options Made Easy” “Earnings Predictions” members were advised to buy Macy's Inc. put options on Monday, November 18, 2019, and have already pocketed potential profits of 182%.
The Recommended Trades on Macys.....
Specialty retailer Macy's Inc. (NYSE:M) is expected to report its earnings before the market opens. The consensus earnings estimate is for $0.01 per share on revenue of $5.31 billion; but the Whisper number is higher at $0.04 per share.
Consensus estimates are for earnings to decline year-over-year by 96.30% with revenue decreasing by 1.74%.
The issues plaguing Macy’s are longstanding and not new.
Macy’s downturn is one that helped spark broader fears that traditional brick and mortar retail’s days were numbered in the Amazon era. And Macy’s particularly has not been able to find success or inspire much Wall Street confidence......read more.....
.....Macy’s stock began to tumble in the summer of 2015 and despite a brief comeback, it has taken a nosedive ever since. M shares have fallen over 72% in the past five years, as the broader retail industry climbed 80%. And the stock is down 50% over the last 12 months.
Short interest has increased by 106.9% and overall earnings estimates
have been revised lower since the company's last earnings release.
Option trade to consider: Buy the M DEC 20 2019 17.000 PUT at approximately $1.10.
Negative Factors for Macys.....
Management highlighted that late arrival of cold weather, softness in international tourism and lower-than-expected performance in lower tier malls hurt the top line.
Macy's previously raised prices of certain products such as luggage and houseware but quickly realised consumers were not drawn. Some of its efforts to keep its offerings fresh even ended up being an inventory build-up which remains a ‘core challenge' for the company.
The retailer also tried updating its mobile app and loyalty program, but without any positive result so far.
Also, a data breach added to the mayhem. The security data breach took place between October 7 and October 15 and according to TechCrunch, private information of thousands of consumers is compromised.
Macy’s, however, claims that only a small percentage of its customers were affected by this hacking intrusion and that it already introduced counter measures as they notified customers last week through letter-form.
But this is not the first-time hackers are targeting Macy's. Thousands of online customers were also compromised in another incident last year, so there will be quite a bit of damage control ahead to restore the confidence of its online users.
As well, the shortened shopping season is one more challenge facing the department store category.
“Large contributors such as Drug Stores and Home Improvement have been hit by reimbursement pressures and softer housing markets while department stores, apparel and foot wear, specialty retailers, and auto retailers have underperformed in 2019,” wrote Moody’s in an Oct. 31 note.
“In addition to competitive and promotional challenges, companies are facing rising costs as the labor market continues to tighten. These costs are generating pressure on company margins that could weigh on overall profitability.”
Another negative aspect is that Macy’s could also be feeling a drag from Kohl’s which cut its guidance during the premarket hours after reporting a third-quarter earnings and sales miss. Kohl’s shares were down 18.4% in Tuesday trading.
YOU NEED TO BE IN TO PROFIT!
The company said it now expects full-year sales to be down 2.5% to down 2.0% compared with prior guidance for roughly flat.
Same-store sales are expected to be down 1.5% to 1.0% compared with earlier guidance of flat to up 1%. Adjusted per-share earnings are expected to range from $2.57 to $2.77, compared with prior guidance of $2.85 to $3.05.
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Where to now for Macys?
Macy's can only expect increased pressure from its competitors as more brands are shifting away in order to establish a direct channel to their customers.
The sustainability of the stock's immediate price movement based on the recently-released numbers, and future earnings expectations will mostly depend on management's future movements.
The questions remain......Where is Macys Inc. headed now?
Will we recommend another options trade on Macys Inc.?
What will “Stock Options Made Easy” advise members to do?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!