Department store operator Macy’s Inc. reported a 5% decrease in online sales for its second fiscal quarter, which ended July 30. But online sales remained 37% higher than the comparable quarter in 2019 — before the COVID-19 pandemic drove millions of consumers to buy online.

Macy’s says online sales for the quarter represented 30% of net sales. That was a two-percentage-point decline from the second quarter of 2021 but eight percentage points higher than the second quarter of 2019.

Macy’s reported total (online and offline) Q2 sales of $5.60 billion, down slightly from $5.65 billion a year earlier. Net income was $275 million, down 20.3% from $345 million a year earlier. Operating income was $399 million, down 33.2% from $597 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in Q2 totaled $616 million, down 26.3% from $836 million a year earlier.

For the six months ended July 30, Macy’s reported total (online and offline) sales of $10.95 billion, up 5.8% from $10.35 billion for the comparable period in 2021. Net income for the six months was $561 million, up 25.2% from $448 million a year earlier. Operating income was $862 million, up 6.2% from a year earlier. Adjusted EBITDA was $1.30 billion, down slightly from $1.31 billion a year earlier.

Macy’s Inc. ranks No. 16 in the Top 1000, Digital Commerce 360’s database of North American e-retailers by web sales.

Guidance for the fiscal year 

The retailer also cut its profit and revenue guidance for the full fiscal year. Macy’s CEO Jeff Gennette cited “a continued deterioration of consumer discretionary spending” and high inventory levels. Macy’s new outlook anticipates markdowns and promotions to liquidate “aged inventory,” the company said in a statement.

The retailer now expects full-year revenue of $24.34 billion to $24.58 billion. In May, Macy’s expected sales for the year of $24.46 billion to $24.70 billion. The merchant now anticipates an EBITDA of about 10.5% of sales. Macy’s earlier expected EBITDA of 11.2% to 11.7% of sales.

“During the quarter, we observed that all retailers were working to shed their excess inventory, setting the industry up for higher permanent markdowns and promotional levels,” Macy’s Gennette said during a Tuesday conference call with analysts, according to a Seeking Alpha transcript.

Inventory problems

Gennette said industry-wide inventory levels, coupled with a slowdown in consumer discretionary spending, “resulted in elevated inventory levels within certain categories” at Macy’s.

He said the retailer plans to be aggressive in taking the necessary markdowns and stocking fresh inventory with higher demand.

“More than 55% of our offerings during holiday 2022 will be new, an increase of over 30 percentage points from holiday 2019,” Gennette said. “And we believe this will position us well to meet customer expectations.”

For the quarter ended July 30, Macy’s reported:

• Total (online and offline) Q2 sales of $5.60 billion, down slightly from $5.65 billion for the comparable period in 2021.
• Net income of $275 million, down 26.3% from $345 million a year earlier.
• Operating income of $399 million, down 33.2% from $597 million a year earlier.
• Adjusted EBITDA of $616 million, down 26.3% from $836 million a year earlier.

For the six months ended July 30, Macy’s reported:

• Total (online and offline) sales of $10.95 billion, up 5.8% from $10.35 billion for the comparable period in 2021.
• Net income of $561 million, up 25.2% from $448 million a year earlier.
• Operating income of $862 million, up 6.2% from a year earlier.
• Adjusted EBITDA of $1.30 billion, down slightly from $1.31 billion a year earlier.

Percentage changes may not align exactly with dollar figures due to rounding.

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