Macy’s Inc. (NYSE:M) earnings topped Wall Street expectations helping bolster the company’s sentiments in the market. A confirmation that the company has opened nearly all its stores amid the COVID-19 pandemic also helped affirm long term prospects amid a challenging business environment.
The department store has come under pressure in recent months amid a change in consumer shopping patterns in the aftermath of the pandemic. The stock did shed more than 40% in market value in the first half of the year as the overall market crashed. However, it has bounced back, rallying by more than 10% from one-year lows.
A better than expected, Macy’s earnings report appears to be the latest catalyst that should help accelerate a bounce back from current lows. For the quarter ending May, the company plunged to a net loss of $3.58 billion or $11.53 a share, compared to earnings of $136 million reported a year earlier. Excluding the impact of non-recurrent items, the company printed a net loss of $2.03 a share in line with consensus estimates.
Sales in the quarter fell 45.2% to $3.02 billion as the company felt the full force of COVID-19 disruption that resulted in the shutdown of many stores. However, the company has warned that sales could tank in the current quarter as a second wave of coronavirus infections continues to fuel a new wave of disruptions. The retailer has already warned that it could close as many as 125 stores over the next three years.
The Department store could also be hit hard in the second half of the year on boarders remaining closed. Macy’s has always generated significant amount of sales from people traveling from overseas and doing shopping in some of its stores.
The Chief Financial Officer has already affirmed they do not expect any international tourism sales for the remainder of the year. Last year, sales from people traveling from other countries accounted for 4% of total sales.
Amidst the disappointing Macy’s earnings, a spike in the sale of luxury goods at the Bloomingdale stores continues to provide a ray of hope. The increase is attributed to lots of domestic buys that most of the time would go to other countries.