Macy's $M slides 8% following sales miss despite last weeks retail sales

Retail chain Macy's fell 8% in the early hours of today's premarket session following a huge miss in sales in its fiscal second quarter. Same-store sales fell 3.3%, while FactSet was expecting a 0.9% decline, with CEO Tony Spring citing turbulent consumer environment for the miss as consumers are still reluctant to spend.

The company - whose portfolio includes Bloomingdale's and Bluemercury - had net income of $150 million, or 53 cents a share, for the quarter through Aug. 3, after a loss of $22 million, or 8 cents a share, in the year-earlier period. Adjusted per-share earnings were also 53 cents, well ahead of the 30-cent FactSet consensus. Sales fell to $4.937 billion from $5.130 billion a year ago, below the $5.059 billion FactSet consensus. Macy's now expects sales to range from $22.1 billion to $22.4 billion, down from prior guidance of $22.3 billion to $22.9 billion, with expectations that same-store sales will fall 2% to 0.5%, compared with prior guidance of down 1% to up 1.5%. The company still expects adjusted EPS to range from $2.55 to $2.90.

This should come as no surprise when considering the macro climate in America. Despite last week's retail sales coming in better than expected, index consumer sentiment rose to 67.8 from 66.4 MoM in August, reflecting a 1.4-point gain, consumer sentiment is still down 2.1 points for the year. It is interesting to note, however, that US consumer savings rate has dropped to 3.4% in august compared to 3.5% in the month prior and 4.5% last year. This begs the question, What's going on?

It's clear that the FED's higher-for-longer policy is still taking its toll on consumers as high mortgage rates and cost of living continue to eat out at salaries despite real average wages increasing 0.7% MoM and 4.72% YoY. Unemployment has ticked higher also to 4.3%, reflecting a 0.2 increase from last report. Economists expect this figure to continue rising for the upcoming months as forward guidance reveals more layoffs and fewer hirings across all sectors especially tech and finance.