Retailers are giving their investors a delayed lump of coal.
Several high-profile retailers are out with lackluster sales and profit updates ahead of their full results in late February/early March. Overall, the vibe in the reports are dim as consumers pullback on discretionary purchases and retailers battle through stubborn inflation and still bloated inventories.
Here are three warnings that are standing out on Monday.
Macy's (M) warned that it sees sales at the low end to mid-point of guidance for $8.16 billion to $8.40 billion. Analysts were modeling for $8.31 billion in sales, according to Yahoo Finance data. Earnings are expected to be within the guidance range of $1.47 to $1.67. Yahoo Finance data shows analysts were banking on $1.60 a share. With this earnings pre-announcement, Macy's essentially issued a profit warning for the first half of 2023 in addition to telegraphing a less-than-stellar holiday season. While Macy's inventory levels look to be in good shape despite the sales miss, look for the Street to slash their profit estimates for 2023 amid margin pressures and a more cautious consumer. The stock is likely dead money — with a downward bias — until we get evidence of a re-acceleration in consumer spending (for Macy's and other retailers, hopefully this happens before the spring selling season).
Macy's shares are off by roughly 5% pre-market.
Lululemon stock (LULU) fell by roughly 10% as holiday season results came in shy of super lofty Wall Street expectations. Lululemon said it now expects that net sales will be in the range of $2.66 billion to $2.70 billion. The company's previous guidance range was $2.605 billion to $2.655 billion. Analyst estimates called for $2.67 billion in sales. Earnings for the fourth quarter are seen in the range of $4.22 to $4.27, downwardly revised at the top-end from $4.20 to $4.30. The Street forecast earnings of $4.30.
Of bigger concern is that Lululemon, which is generally anti-product markdown, appears to have driven its quarter by aggressive product markdowns — gross margins are seen dropping 90 to 110 basis points.
Chico's (CHS), a women's apparel retailer, also had a challenging holiday season — notably at its higher end White House Black Market concept. The company now expects total net sales to range from $505 million to $515 million and diluted earnings per share to range from ($0.02) to $0.00. Chico's previously guided to fourth quarter sales of $535 to $555 million and earnings of $0.07 to $0.10. Wall Street was modeling for $545 million in sales and earnings of $0.09
Shares of Chico's tanked more than 10% in pre-market trading.
Abercrombie & Fitch: One of the few bright spots on Monday was specialty apparel retailer Abercrombie & Fitch. Shares popped 4% in pre-market trading as the company lifted its sales and margin outlooks for the fourth quarter.
Notable is that Abercrombie called out improved results in the men's business at its namesake business, something the Street has been looking to see before getting more constructive on the stock.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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