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Macy's Blames "Tepid Spending" On Revenue Miss: Same Store Sales Tumble; Slashes Guidance

Tyler Durden's picture




 

The "unexpected" weakness among US consumption, that segment accountable for 70% of US GDP, continues this morning when moments ago Macy's reported a trifecta of weak data, reporting a miss on Q3 sales which came at $5.87 billion below the $6.1 billion expected, and down from the $6.2 billion a year ago, but also a plunge in comparable store sales which tumbled by 3.9%, far worse than the expected drop of -0.4%, and nearly three times as bad as the 1.4% drop a year ago.

Cash flow plunged: cash provided by operating activities was $278 million in the first three quarters of 2015, compared with $841 million in the first three quarters of 2014.

Finally, M also slashed its full year same store guidance down from flat to -1.8% to -2.2% with sales projected to drop -2.7% to -3.1%, compared to a previous guidance of -1%, as contrary to the propaganda, the discretionary spending of the US consumer is bad and getting worse by the day.

Here is the company's explanation for this debacle:

“We are disappointed that the pace of sales did not improve in the third quarter, as we had expected. Spending by domestic customers remained tepid, especially in key apparel and accessory categories. Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s stores in tourist centers, which are some of our company’s largest-volume and most profitable locations,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc.

 

“Moving forward, we are accelerating steps needed to adapt in response to changing customer shopping preferences so we can restore our annual comparable sales growth on an owned plus licensed basis in the years ahead to the level of 2 percent to 3 percent while re-attaining an EBITDA rate as percent of sales of 14 percent. This includes building on our strength as a leading omnichannel innovator with consistent growth in online sales,” Lundgren said. “No other retailer has our track record of mastering change and creating shareholder value with a model of customer centricity. We have a deep and resourceful management team that is skilled in creating and executing successful strategies. Since the beginning of fiscal 2009, we have returned nearly $9 billion to shareholders. Our Total Shareholder Return has been 540 percent during that period, compared with a 121 percent increase in the Dow Jones Industrial Average.”

Any time a company starts touting its historical share return to justify a terrible quarter, run.

M, just like MCD, announced it would not be pursuing a REIT conversion at this time.

After extensive review with the assistance of our experienced financial, tax, legal and real estate advisors, the company has decided not to pursue the formation of a REIT at this time. The board of directors has concluded that a REIT does not offer sufficient upside potential for value creation. To the extent that circumstances change, we may revisit this alternative in the future.

And while readers are still thinking about that 540% return since 2009, here is why it won't be repeated any time soon. Presenting the company's guidance:

The company has revised its 2015 guidance. Earnings per diluted share for the full-year 2015 now are expected in the range of $4.20 to $4.30, excluding asset impairment charges associated primarily with previously announced store closings. This compares with previous guidance in the range of $4.70 to $4.80. Updated annual guidance calculates to guidance for fourth quarter earnings of $2.54 to $2.64 per diluted share, excluding any additional charges associated with store closings or cost reductions. Earnings guidance for 2015 includes gains from asset sales, including approximately $60 million from the sale of real estate in Seattle and an expected $250 million gain on the sale of real estate in downtown Brooklyn.

 

Guidance is for full-year 2015 comparable sales on an owned plus licensed basis to decrease by 1.8 percent to 2.2 percent, compared with previous guidance of approximately flat. This calculates to fourth quarter comparable sales on an owned plus licensed basis to decline by 2.0 percent to 3.0 percent. Full-year and fourth quarter 2015 comparable sales on an owned basis will be approximately 50 basis points lower than on an owned plus licensed basis. The company expects 2015 total sales to be down by 2.7 percent to 3.1 percent, compared to previous guidance for total sales to be down approximately 1 percent.

Oh well, time to blame the "unseasonably warm weather" again.

And on all this horrible news, the stock is inexplicably down.

 

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Wed, 11/11/2015 - 09:27 | 6776641 Bill of Rights
Bill of Rights's picture

80% off sale in every isle starting today.

Wed, 11/11/2015 - 09:34 | 6776664 VinceFostersGhost
VinceFostersGhost's picture

 

 

They should sale heathcare insurance.....you have to buy that crap.

 

You can just pay the fine....but I'm not suppose to mention that.....oops.

Wed, 11/11/2015 - 09:44 | 6776691 philipat
philipat's picture

Nah, it's just the "Unseasonally warm weather" keeping the shoppers away. Bring on the rate hikes? If Mr Yellen goes ahead it can only be because "They" have decided to crash the system rather than extending and pretending further resulting in an even bigger crash later. It WOULD be nice if the crash comes on Obomba's watch because it couldn't happen to a more deserving...person.

I continue to believe that it ISNT rocket science. In an economy which comprises 70%+ consumption, for that economy to grow, there MUST by definition, be an increase in consumption. WIth declining real disposable incomes and skyrocketings costs (Healthcare, Education, Food etc.) that is NOT going to happen is it?

Wed, 11/11/2015 - 09:47 | 6776717 negative rates
negative rates's picture

Plus if you recall we hav'nt had such stability within  the administration (3 two term presidents) since, well, the founding of this country.

Wed, 11/11/2015 - 09:50 | 6776733 CheapBastard
CheapBastard's picture

It's the Robustus Recovery in history!

 

80% off ... with $10 cash back and a hundred reward points and buy 1 get five free....

 

Stores still empty. I've never seen anythng like it.

 

 

Wed, 11/11/2015 - 09:55 | 6776754 philipat
philipat's picture

PS. Isn't saying "Tepid spending is responsible for lower revenues" a bit like saying "Sales are down because sales are down"? WTF?

Wed, 11/11/2015 - 09:51 | 6776738 TeamDepends
TeamDepends's picture

They will probably take the nuclear option and cancel Christmas. That way, there will be no pesky "holiday season" to amplify dismal sales. An additional benefit would be an outraged conservative base.

Wed, 11/11/2015 - 10:02 | 6776798 Groundhog Day
Groundhog Day's picture

In the spirit of the holidays I'm going to do my part by canceling the ridiculous shopping and volunteer my time helping those in need.

Wed, 11/11/2015 - 10:15 | 6776874 spiral galaxy
spiral galaxy's picture

How true! Instead of useless presents that lay around for years, I now 'gift' the family a visit or three during the year with treks to baseball games, museums, shows, dinners, etc., and help out with needed repairs around the house! And come 'black Friday' we can turn on the TV and watch all the lo fo Hilary supporters knock down the doors at WalMart :-)

Wed, 11/11/2015 - 09:42 | 6776699 Id fight Gandhi
Id fight Gandhi's picture

Well maybe next year a law, err tax will demand we all buy new bedspreads and high end blenders.

Wed, 11/11/2015 - 09:56 | 6776761 Groundhog Day
Groundhog Day's picture

but we just created 271000 jobs last month....spending growth is just aroud the corner

jobless recovery, green shoots, earningsless recovery, wage growthless recovery

did i miss anything

Wed, 11/11/2015 - 10:07 | 6776818 Jlasoon
Jlasoon's picture

Well Rubio, Fiorina, Bush, Carson, and Kasich all want to start WW3 with the 'so-called' gangster from Russia. Maybe that's the plan to stimulate the economy.

Wed, 11/11/2015 - 10:18 | 6776889 silverer
silverer's picture

Yes.  But the fine is due to rise each year.  Probably until it equals the premium you would have to pay.

Wed, 11/11/2015 - 10:01 | 6776703 buzzsaw99
buzzsaw99's picture

still too high. free is too high for most of their stuff.

Wed, 11/11/2015 - 10:21 | 6776906 NEOSERF
NEOSERF's picture

We are already done shopping for Xmas.  Bet we are not alone.  Good opportunity to show a little restraint and to talk about saving and austerity to the kids (college age).  Would like to move to a charity donation for Xmas and be done with it each year outside a get together.

Wed, 11/11/2015 - 10:27 | 6776926 buzzsaw99
buzzsaw99's picture

college age there is only one gift, cash. prices will be lower after the first imo.

Wed, 11/11/2015 - 09:31 | 6776652 JustObserving
JustObserving's picture

Apparently, the 5% unemployment rate is not putting more money in people's pockets.  Maybe, the real unemployment rate is 23% as John Williams of Shadowstats claims.

Old Yeller will be introducing NIRP soon enough

Wed, 11/11/2015 - 09:41 | 6776689 Id fight Gandhi
Id fight Gandhi's picture

 

 

Young adults don't buy expensive low quality suits, dining sets and household items. They have no need for them or the money.

 

They don't mind buying online or used clothes.

 

 

 

 

Wed, 11/11/2015 - 09:56 | 6776756 CheapBastard
CheapBastard's picture

I like the "Slightly used-like new" clothes on FleaBay that arrives smelling like 20 years of cigarette smoke and stained with who knows what -- dog popop, oil, coffee, etc.  Half their "used like new" stuff is so misrepresented. 

 

Stick to the brand new or NWT and it's somewhat better but still no match for Amazon which in my experience is excellent.

Wed, 11/11/2015 - 12:51 | 6777586 bmr22
bmr22's picture

Hey now I resmeble that remark lol. We sell lots of used items on Fleabay and do not sell nasty crap. If you do sell nasty stuff it will get returned to you at your cost and the buyer will 99% of the time get a refund weather it be you that gives it or Ebay taking out of your account after a dispute. So if you do that sort of thing you will not be in business for long. As well as sell a lot of used items on EB the family also buys a lot of things there and if you look at the pictures and the persons feedback you can find some killer items for a fraction of the price. Everytime I buy an item on EB or the GW or a yrad sale I know I am doing my little part to empower the little guys and starving so many different beasts, it makes me all warm and fuzzy inside.

Wed, 11/11/2015 - 09:30 | 6776653 duo
duo's picture

In the end, only Nordstrom and Dollar General will be left.

Wed, 11/11/2015 - 09:38 | 6776678 AMPALANCE
AMPALANCE's picture

No-one, not even the government itself can escape the Central bankers inflation, Before this is over military spending will be massively cut. Sorry veterans, you're on your own, thanks for your service.

Wed, 11/11/2015 - 10:15 | 6776875 Osmium
Osmium's picture

Seems to me, judging by all the horror stories you hear about the VA hospitals, they've been on their own for awhile now.

Wed, 11/11/2015 - 10:40 | 6776974 AMPALANCE
AMPALANCE's picture

All part of the plan, leave Veterans, the elderly, the disabled, and the unemployed twisting in the wind untill they demand more government, rinse repeat.

Wed, 11/11/2015 - 09:33 | 6776662 Zirpedge
Zirpedge's picture

[Reading newspaper headlines]

Passengers certain to die.

Airline negligent.

There's a sale at Penny's.

Wed, 11/11/2015 - 10:26 | 6776922 duo
duo's picture

I got it.  +1

Wed, 11/11/2015 - 09:34 | 6776663 youngman
youngman's picture

For the people that have a job...pay expenses and buy insurance....when your health costs go up 50%...you will pay that and cut something else....its how we live..within our means....we pay our own bills...even though we might not to ....

Wed, 11/11/2015 - 10:28 | 6776928 duo
duo's picture

It will be known in the future as the Obamacare Recession.  Take the equivalent of two car payments from every family's income for essentially nothing, and the consumer economy collpses.  Only BLS lies and cheap debt cover it up.

There is no replacement for cash flow.  Families know this, and corporate America will re-learn this soon.

Wed, 11/11/2015 - 09:35 | 6776666 lunaticfringe
lunaticfringe's picture

Lack of spending is blamed for loss of revenue.

-Captain Obvious

Wed, 11/11/2015 - 09:42 | 6776694 Arnold
Arnold's picture

Exponential observance of Festivus.

Wed, 11/11/2015 - 09:44 | 6776702 VinceFostersGhost
VinceFostersGhost's picture

 

 

Lack of spending is blamed for loss of revenue.

 

A 29.5 hr/ek economy is not as strong as a 40 hr/wk economy.

 

Huh....didn't make the connection at first.

Wed, 11/11/2015 - 09:35 | 6776668 AMPALANCE
AMPALANCE's picture

The snowball of the Keynesian delusion gains a little more speed towards the cliff that some say doesn't exist. Scorched earth economics creates chaos, chaos is needed for the socialist to come to power, so they can fail just like every other socialist before them.

Wed, 11/11/2015 - 09:37 | 6776670 mijev
mijev's picture

"The "unexpected" weakness among US consumption, that segment accountable for 70% of US GDP"
I always take that 70% figure with a grain of salt. If the 70% don't have any money then all that's left is the government and businesses, both entirely dependent on that same 70%. Without taxes the government has to resort to more printing and without consumer spending, non-military focused businesses shut down. We are already way beyond that point and the next phase is ugly. 70% is much closer to 100%.

Wed, 11/11/2015 - 09:45 | 6776711 lunaticfringe
lunaticfringe's picture

They are trying to take 1/4 of my net income each month and make me buy health insurance with it. That is the biggest growth sector in GDP.

If they would simply pass a couple more laws, make people take out a 2nd mortgage or buy motor homes- just think of the GDP and spending boost.

Oh happy days are here again....

Wed, 11/11/2015 - 09:39 | 6776679 Gatos Locos
Gatos Locos's picture

Ooops!!

Wed, 11/11/2015 - 09:44 | 6776710 VinceFostersGhost
VinceFostersGhost's picture

 

 

Actually.....it was on purpose.

Wed, 11/11/2015 - 09:39 | 6776680 buzzsaw99
buzzsaw99's picture

I was in Macy's a couple of weeks ago. Their shit sucks. I didn't see a damn thing I wanted. I also looked at the women's clothes because i am a closet transvestite and egad it was all cheap and hideous. i can find better stuff at the goodwill.

Wed, 11/11/2015 - 09:44 | 6776706 AMPALANCE
AMPALANCE's picture

Long goodwill and pitchforks, we need another gun control law scare so people go out and buy more guns and ammo, to help the GDP.

Wed, 11/11/2015 - 11:50 | 6777310 Scooby Doo
Scooby Doo's picture

Vapid, emaciated models; ripped, skin tight, ugly fashions, coupons good on two items in the store (you get to figure out which two), long lines at the registers. Wonder why more people aren't shopping there?

Wed, 11/11/2015 - 09:53 | 6776698 rejected
rejected's picture

Between Obamacare and layoffs what would they expect?

Companies laying off American workers having them train their foreign replacements is still a favorite American game.   Americans doing what Americans do best.... Screw fellow Americans.

http://dailycaller.com/2015/11/10/scores-of-it-workers-laid-off-forced-t...

 

Just how can anyone expect a thriving economy when government and Americans themselves are eliminating decent paying jobs as fast as they can.

This country and its "citizens" are one sick puppy.

 

EDIT: As Disney pretty much owns ABC ,,, I doub't too much will be covered here.

Wed, 11/11/2015 - 12:12 | 6777418 Offthebeach
Offthebeach's picture

I've got options.

With ObamaCare I can now afford that pig valve the doctor was mumbling in his sing song English. ( kept blacking out and thought it was the cheap whisky I stepped down to). I just have to save up for the deductible, drug co-pays and a bank for the usual monthly shelter, calories, truck/health insurance payments, taxes while i recover. In the present booming labor economy with "no inflation", I should be in clear in 3-6 years.  Doc said sump'tn about that too. Something about bucket kicking or farm buying, which is odd as I can't grow weed nor weeds.

Or, I can drink heavily and often.

 

 

Wed, 11/11/2015 - 09:51 | 6776736 Phillyguy
Phillyguy's picture

Where is the purchasing power? > 90% of “new” jobs are temp positions- low pay, no benefits and no job security. People are paying more money for rent had health insurance, further eroding purchasing power. The bulk of economic gains since the 2008 financial crash have gone to wealthiest segment of US society. If you want the economy to grow, provide more good paying jobs.

 

The economic problems confronting the US are the result of 1) multiple tax cuts for the wealthy (beginning with Reagan), 2) financial de-regulation- repeal of Glass Steagall and passage of Commodity Futures Modernization act of 2000 (Clinton), 3) continuous out-sourcing of US manufacturing jobs to Mexico, China and other low wage platforms- started with NAFTA (more Clinton), 4) more tax cuts for the wealthy, followed by taxpayer funded $ multi trillion wars in Iraq, Afghanistan, etc. and by taxpayer funded $ multi trillion Wall St bank bailouts (Bush II; continued by Obama), which have created new bubbles in the stock market and trendy real estate in SF, NYC, Boston, etc. 

Wed, 11/11/2015 - 10:21 | 6776907 HowdyDoody
HowdyDoody's picture

The wealthy job creators are obviously not wealth enough. They need more wealth in order to incenivize them to create more jobs.

Wed, 11/11/2015 - 19:43 | 6779437 11b40
11b40's picture

Nice tight summation @ Phillyguy

Wed, 11/11/2015 - 09:51 | 6776737 Permanentvacae
Permanentvacae's picture

Who shops at Macy's? Last few times I went in there in pretty sure I was beaten and battered with free sprays of perfume from aging women and tumbleweeds. Maybe they should install some saloons

Wed, 11/11/2015 - 09:58 | 6776772 pupdog1
pupdog1's picture

My local Macys is now all about horrid Chinese and Indian crap sold by clerks who make it clear they hate serving whitey.

Sales are tepid?

I am stunned.

Wed, 11/11/2015 - 09:58 | 6776774 Mewa
Mewa's picture

Jingle bells, jingle bells...going to be a white xmas for bankers...meanwhile mainstreet gets slaughtered and retailers cant understand why they are not buying more junk on credit....just maybe food and rent comes first....time for another moron from the Fed to yak about raising rates again...everything is swell.....

 

.

 

 

 

 

time f

Wed, 11/11/2015 - 09:58 | 6776775 Mewa
Mewa's picture

Jingle bells, jingle bells...going to be a white xmas for bankers...meanwhile mainstreet gets slaughtered and retailers cant understand why they are not buying more junk on credit....just maybe food and rent comes first....time for another moron from the Fed to yak about raising rates again...everything is swell.....

 

.

 

 

 

 

time f

Wed, 11/11/2015 - 09:59 | 6776787 somebody poison...
somebody poisoned the water hole's picture

Some good news for retail... J.C Penney's beat same store sales yy

Wed, 11/11/2015 - 10:01 | 6776792 E.F. Mutton
E.F. Mutton's picture

Consumer spending related to revenues? That's crazy talk.  Just buy back some stock at 0% and watch the bonuses roll in.

Wed, 11/11/2015 - 10:08 | 6776823 Squid Viscous
Squid Viscous's picture

another Cramer fave, according to him they were killing it a few weeks ago...

Wed, 11/11/2015 - 10:18 | 6776891 FreeNewEnergy
FreeNewEnergy's picture

Terry, Terry, Terry...

Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc.

If I was gay, I'd kiss you on the lips for this juicy spittle:

we are accelerating steps needed to adapt in response to changing customer shopping preferences

Let's be clear, Terry. Your "steps" to "adapt" would include giving more shit away? "Changing customer preferences" most likely translates into, "people aren't buying anything."

So, your adaptation would be to, um, lower prices? Before or after Black Friday? I'd say it's time for a 60% off sale. Or maybe 80%. NOW. RIGHT FUCKING NOW.

Here's a clue for you, asshat. I, and most of the people I actually give a shit about (we're all in the 50-65 age group) DON'T FUCKING NEED ANYTHING YOU'RE SELLING. We already have too many shirts, pants, pots, pans, cosmetics, blenders, toaster ovens, curtains, nick-knacks, sheets, TVs, CDs, pant-suits, etc. We shop at garage sales and goodwill. We grow our own vegetables; we shoot Bambi and eat Bambi.

So, about 1/3 of your target market (Baby Boomers and selected Gen Xers) is NOT SHOPPING AT MACY'S OR BLOOMINDALES OR FEDERATED (do they still exist?).

Let me be the first to wish you a Happy Kwanza, Mutherfucker.

#OldFuckingShoppersLivesMatterBitchez!

Wed, 11/11/2015 - 10:25 | 6776921 buzzsaw99
buzzsaw99's picture

they think the macy's name is worth something but it isn't anymore. people aren't fooled by a fancy high overhead store with cheap ass dollar store quality merchandise.

Wed, 11/11/2015 - 10:18 | 6776895 silverer
silverer's picture

Uh oh.  Does this mean no parade?

Wed, 11/11/2015 - 10:26 | 6776925 FreeNewEnergy
FreeNewEnergy's picture

Macy's will close even more stores.

Macy’s is Closing Even More Stores

2016 shaping up to be a banner year for retail. How's that $15/hour minimum wage looking, BTW?

Wed, 11/11/2015 - 10:29 | 6776933 ToSoft4Truth
ToSoft4Truth's picture

I'm on Twitter.  We've got a boycott against Macy’s going.

1. Macy’s sources from Muslim countries like Pakistan.
2. Macy’s talked smack about Trump.

Wed, 11/11/2015 - 10:35 | 6776958 FreeNewEnergy
FreeNewEnergy's picture

Cramer did it! He blamed the weather for Macy's miss. Clueless fucker, he is.

http://finance.yahoo.com/video/cramers-stock-watch-macys-135200204.html

Wed, 11/11/2015 - 11:04 | 6777078 astoriajoe
astoriajoe's picture

Maybe they should sell cars and houses. 

Wed, 11/11/2015 - 11:10 | 6777110 yogibear
yogibear's picture

Tiny houses are in vouge with the debt-strapped youth.

Banksters are forcing people into a 3rd-world lifestyle.

Wed, 11/11/2015 - 11:08 | 6777102 yogibear
yogibear's picture

Resale shops are booming.

Wed, 11/11/2015 - 11:23 | 6777193 Youri Carma
Youri Carma's picture

Also See:

Macy's to close up to 40 underperforming stores
8 September 2015, by Suzanne Kapner (MarketWatch)
http://www.marketwatch.com/story/macys-to-close-up-to-40-underperforming-stores-2015-09-08

Macy's to cut jobs, close 14 stores
8 January 2015, (Reuters)
http://www.reuters.com/article/2015/01/08/us-macys-restructuring-idUSKBN0KH2C720150108

Wed, 11/11/2015 - 11:28 | 6777218 astoriajoe
astoriajoe's picture

for what its worth, my optician now offers eyeglass leases. 

Wed, 11/11/2015 - 12:17 | 6777440 foodstampbarry
foodstampbarry's picture

I cut up my Macy's card when they came out against the Donald and stopped selling his ties. 

Fuck you Macy's

Wed, 11/11/2015 - 21:19 | 6779809 meterman
meterman's picture

Forget all the lame excuses. Past practice has finally started to catch up with those crimminals at Macy's. They have been screwing over and stealing from their customers for years. The truth is out there. People are just tired of Macy's crap and are boycotting the store. About time.

I macy Macy's. (See post eleswhere in othe Macy's story for explaination)

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