Macy’s raises profit outlook as demand for high fashion picks up

Folks carrying protecting masks store at Macy’s Herald Sq. following the outbreak of the coronavirus illness (COVID-19) within the Manhattan borough of New York Metropolis, New York, U.S., December 26, 2020. REUTERS/Jeenah Moon/File Picture

Might 26 (Reuters) – Macy’s Inc (M.N) raised its annual revenue forecast on Thursday, helped by sturdy demand for high-margin attire from customers returning to weddings and different social occasions, at the same time as red-hot inflation saps shopper spending energy.

The division retailer chain’s shares rose 13.8% to $21.86 in premarket buying and selling as the corporate joined rival Nordstrom Inc (JWN.N) in bucking a pattern of revenue warnings from main retailers who’re seeing customers prioritize spending on family necessities. learn extra

Macy’s, hit arduous by retailer closures in the course of the pandemic, stated customers had been shifting again to in-store purchasing from on-line quicker than anticipated as they ditched informal and athleisure attire for costlier attire, formal put on and footwear.

“(The shift in demand) contributed to a rise in retailer foot site visitors as customers usually tend to store in particular person for occasion-based attire,” Macy’s Chief Government Officer Jeff Gennette stated.

The corporate has additionally been stocking up on night robes, anticipating to profit from social occasions gathering steam and forward of what’s predicted to be the largest U.S. wedding ceremony season since 1984. learn extra

Nonetheless, Macy’s stated it expects extra mark downs within the second quarter to do away with extra stock of extra informal attire, which is seeing slowing demand.

Excessive-end trend has additionally been comparatively insulated from the results of inflation thus far this yr and firms together with Macy’s, Nordstrom and Ralph Lauren Corp (RL.N) see prosperous customers persevering with to spend. learn extra

“From the outcomes we have seen, high-end customers are extra resilient to inflation, whereas the common shopper is struggling a bit extra,” Jessica Ramirez, retail analyst at Jane Hali & Associates, stated.

Comparable gross sales at Macy’s luxury-focused Bloomingdale’s shops rose practically 27% within the first quarter.

Macy’s expects fiscal 2022 adjusted earnings per share of $4.53 to $4.95, in contrast with its earlier forecast of $4.13 to $4.52. It additionally beat first-quarter revenue estimates.

Reporting by Uday Sampath in Bengaluru; Modifying by Shounak Dasgupta

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