Macy's Massacred After Slashing Outlook On "Uncertain Consumer" As Inventories Reach Record Highs

Tyler Durden's picture

The retailer apocalypse continues this morning with Macy's crashing almost 10% in the pre-market after missing top-line and slashing its outlook citing the "uncertain direction of consumer spending," which seems odd given the confidence with which The Fed, Obama, and every talking head proclaims the US consumer's health. Comp store sales plunged 6.1% (almost double expectations) and this comes at a time when clothing inventories are at an all-time record high relative to sales.

“We are seeing continued weakness in consumer spending levels for apparel and related categories. In particular, our sales trend relative to expectations meaningfully slowed beginning in mid-March, and first quarter results are below our original outlook. Headwinds also are coming from a second consecutive year of double-digit spending reductions by international visitors in major tourist markets where Macy’s and Bloomingdale’s are key destinations, as well as a slowdown in some center core categories – further intensifying the challenges associated with growing topline sales revenue,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer.

Sales in the first quarter of 2016 totaled $5.771 billion, a decrease of 7.4 percent, compared with sales of $6.232 billion in the same period last year. The year-over-year decline in total sales reflects, in part, the 41 stores closed in 2015. Comparable sales on an owned plus licensed basis were down by 5.6 percent in the first quarter. On an owned basis, first quarter comparable sales declined by 6.1 percent.

Noting that the uncertain direction of consumer spending makes predictions of future performance difficult, Macy’s, Inc. now expects full-year 2016 comparable sales on an owned plus licensed basis to decrease in the range of 3 percent to 4 percent, with comparable sales on an owned basis to be approximately 50 basis points lower. This compares with previous guidance for comparable sales on an owned plus licensed basis to decline by approximately 1 percent in fiscal 2016.

With top-line sales expected to remain below our initial expectations, the company has revised its guidance for earnings per diluted share (excluding settlement charges) in fiscal 2016 to a range of $3.15 to $3.40. This compares with previous guidance of $3.80 to $3.90 per diluted share in 2016.

The headlines are ugly...

  • *MACY'S 1Q NET SALES $5.77B, EST. $5.93B
  • *MACY’S 1Q OWNED BASIS COMP SALES DOWN 6.1%, EST. DOWN 3.1%
  • *MACY'S 1Q COMPS PLUS LICENSED DOWN 5.6%, EST DOWN 3.2%
  • *MACY’S NOW SEES YR ADJ. EPS $3.15-$3.40, SAW $3.80-$3.90

The result.. more pain

 

And it is not going toget better any time soon as inventories are at record highs relative to sales...

Inventories of clothing rose 0.2 percent in March as sales dropped 5.9 percent, pushing the inventory-to-sales ratio for apparel wholesalers to 2.32 months, the highest on record, according to a Commerce Department report released Tuesday.

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MFL8240's picture

Where is the surprise?

VinceFostersGhost's picture

 

 

Turns out bartenders with 29.5 hr/wk jobs don't spend money at Macy's.

 

Hopefully Paul Ryan can help get Hillary elected....and we can keep this streak rolling.

Handful of Dust's picture

Screw Macy's. Last year I saw zero Christmas trees there and no decorations. I asked the manager who ahppened to be walking aorund what's going on. he said the NEW company policy is not to offend some people.

 

Phuck dat!  More sucicidal political correctness from clueless management. If they don't want business from middle class American citizen shoppers let them pray "some people" make up for the losses. Reminds me when the new ceo of JCPenneys pandered to some peoples and threw their long-time middle class customers under the bus.  They almost went bankrupt.

I am basically not [too] religious but every American celebrates these holidays. Even my Jewish friends were pissed about the lack of decorations.

I guarantee Macy's will go bankrupt pandering to these vociferous special interest groups.

meterman's picture

Amen Handful of Dust - Macy's should sink into the sea. They are nothing more than a criminal enterprise and cheat their customers every chance they get. It is obvious that their hateful policies have started to catch up with them, and like me, former customers are boycotting them.

Good Bye Macy's & good riddance. 

NEOSERF's picture

Bartenders and waiters also don't get laid off, the quit or get fired and thus don't show up in the unemployment numbers.  They generally aren't fit or have training for thos 5.8M jobs just waiting for applicants out there yesterday too.

Theonewhoknows's picture
Theonewhoknows (not verified) MFL8240 May 11, 2016 7:23 AM

The surprise is that we don't do anything to change the flood of bad facts coming our way, with all resources we have on ZH and the whole community of 'awakened' people understanding that something has to be done. 

RockySpears's picture

The something that has to be done is the complete removal of the worlds current financial system, not something Joe Bloggs can do (at least directly).

  All that can be done, by those that know, is preparation, because the endingame may not be a pretty sight,

 

RS

847328_3527's picture

All part of the robust recovery. DC is too busy to be bothered with improving the economy, creating jobs, etc They are preoccupied with tracking down climate change deniers and cleaning up restrooms for the LGBT 'ers.

 

Who has time for the American middle class?

 

 

gatorengineer's picture

That the numbers werent alot worse...

lester1's picture

It's the Trump effect !!

 

Both sales and Macy's stock price started tanking around mid July 2015 when Donald Trump told his supporters to boycott Macy's because they support illegal immigration.

markpower49's picture

Macy's CEO attacked Trump for no reason, other than polical correctness. All these leftists will be sent to the ovens.

jus_lite_reading's picture

BUT OBAMA SAID HIS ECONOMY IS HOT HOT HOT!

PS, Macy's fucked with Trump last year and suffered immense losses. Since their absurd Trump tie fiasco, I have not stepped foot into a Macy's. FUCK Macy's!

Cautiously Pessimistic's picture

Macy's Thanksconsuming Day Parade in jeopardy.

venturen's picture

good for 100 points on the DOW...who needs consumers if you can just print money and churn the stock market.  Wonder how many light poles there are around wall street to string bankers up like the old days?

Whoa Dammit's picture

Not surprising. At the mall outside of Boston where the guy smashed his car into Macy's last night then went inside and stabbed people, the parking lot was so empty, it was amazing he found anyone inside Macy's to stab.

NEOSERF's picture

They already did...it is called Amazon.com in the safety of your living room.

 

Inzidious's picture

Dam, but that was pretty funny.

Last of the Middle Class's picture

The cancer killing the middle class is spreading.

Theonewhoknows's picture
Theonewhoknows (not verified) Last of the Middle Class May 11, 2016 7:24 AM

Interesting way of spelling 'federal reserve'... 

Stroke's picture

Macy's caters to the upper middle class.....The "middle class" is choking on wage stagnation, tuition payments, and health care costs.

 The upper middle class may be waking up, and changing their discressionary spending.

Scooby Doo's picture

For real.  We used to shop at Macy's once in a while.  Right now, my obligation payments (food, taxes, Ocare) are using up all our extra money.  The last clothes we bought were 2 pair of work pants from Amazon, & 4 shirts from Goodwill.  Just can't afford to spend money on "wants".

jus_lite_reading's picture

You shop at the GW also? Good for you! We might meet someday!

Phillyguy's picture

Macy’s stock will probably go up. Maybe they will call up Janet Yellen at the FED for some more ultra-cheap money for more stock buybacks. 21st century economics- sales/profits no longer matter. Debt levels are of no concern. The only thing that counts is stock price, which when necessary, is juiced up by CB intervention. Case in point- Caterpillar, another corporate superstar- demand/sales have tanked, but no worries, CAT stock is doing fine-current share price $ 72.52 (up 2.46% Tues).

 

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Phillyguy May 11, 2016 7:32 AM

Well to be fair, CAT is doing the right thing and shrinking it's business because of lower demand. When Macys starts slashing it's store count dramatically like CAT is cutting capacity then you might be right on that stock price call. You can add more value to your business by shrinking if the industry trends call for it versus staying large and holding onto the high fixed costs

arby63's picture

We need to remind about 150 cities across America of the very same concept: SHRINK or die.

QE4MeASAP's picture

Trump's rise to nominee status will be blamed for people spending less as spring/summer progresses.

youngman's picture

he people know they are going to get hit hard with Obacare increases...so they stop buying crap...

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) May 11, 2016 7:30 AM

Spring has been too cold. I'm sure the consumer will come out in droves once the summer warms up. 

jus_lite_reading's picture

Too cold, too hot, too dry, too wet. To quote a pathological liar, fraud and the reincarnation of Satan, "What difference does it make?"

ejmoosa's picture

Sales Terminals do not lie.

kahunabear's picture

Online shopping is so much easier. Most importantly, I can stay focused on my phone at all times.

blindfaith's picture

Yes, well the sellers may be revolting soon and you have nothing to buy on line.  Take Ebay for example.

                    
sold a new sealed in plastic wall dimmer 9 weeks ago ( near 3 months)  with 14 day return.  Just had to refund the buyer 100% or pay to have it sent back ...she said is stopped working.  Lightening strike?  God's will?  If I said NO, ebay would take the money out of my account and sent it anyway and DUN my record.
 
Ebay will eat it its sellers alive with this practice.  Never mind about 14 or 30 day return on soiled clothing....return it anytime, no more laundry bills, and seller pays.  I am told there are no exemptions except Business goods.  It even includes cat food I am told.
 
Beware, there is no such thing as "as is" now, you are on the hook for who knows how long as a seller.
 
This should be great for Amazon, and a killer for ebay.  I talked to an ebay "customer service" guy who told me " they have to do it or Wall Street won't be happy and support their stock price, besides we have to compete with Amazon and Macy's"  That is what he said.  Ebay is now all about Wall Street, not you. I just cancelled 42 listings and it all goes to charity for them to sell.  Enough with eBat, when Whitman left they lost their way. May be a good short is waiting in the shadows.  
Got Social Networks...post it.

 

donebydoug's picture

So, smarties on zerohedge,  here's my question of you:  What do cotton futures tell you regarding this?  Must be as bad as other commodities, no? 

VinceFostersGhost's picture

 

 

I thought the test was going to be on pork bellies today......no one said a damn thing about cotton.

ebworthen's picture

Nothing better than a pair of 100% cotton boxers; soft and dry.

I buy a 10-pack once every five or six years.

jus_lite_reading's picture

The fact that you even WEAR underwear tells me you are not truly awake! Be free my brother! Let the boys be free!

;0

Laplacian2003's picture

Every five years is an awfully high turnover rate.  I usually get 10 yrs or so before the elastic in the waistband no longer conforms to my fat figure..

wmbz's picture

Yea, but used clothes stores like Salvation Army, Thrift etc... are doing very well. Growing in fact, so the Obozo plan is right on course!

Scooby Doo's picture

That's where we shop for clothes lately. 

Stu Elsample's picture

The slump in sales has nothing to do with King Token Boy's economy. If Macy's wants to be competitive, they need 'transgender' friendly bathrooms ...just ask Target

E.F. Mutton's picture

People need fewer clothes, because of Global Warming.  Yes, that's it.  Global Warming is to blame for Macy's poor sales.

 

Kickaha's picture

I'm pretty sure that if you closely examine the small print in that financial report you'll find a foonote explaining that these sales figures have been adjusted to re-categorize inventory shortages due to employee theft and shoplifiting as "sales", which is the only explanation for how good these results came in.

 

overmedicatedundersexed's picture

shopping at thrift stores is getting hard.. the wealthy are not gifting those good name brands anymore..throw off kmart and wall mart stuff is all i see anymore, heck have not seen a jerry garcia tie in a year.

MoHillbilly's picture
MoHillbilly (not verified) May 11, 2016 7:48 AM

I have 40 acres of Gor-Tex planted that is about ready to harvest. If demand doesn"t pick up I might just leave it in the field to spoil

Rikky's picture

That's what you get when you go against Trump and support a far left progressive agenda. Sorry Macy's (and you to Obama) the country isn't ready for your far left views.

maxamus's picture

As for inventory levels at all these stores/manufacturers.......build it and they will come.......NOT!

Handful of Dust's picture

Obamacare nailed the last nail into the American middle class coffin.

Iconoclast421's picture

Buy iphone 6S, then buy clothes at salvation army. And dont take any selfies inside the store. No one will ever know.