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Alberto Abaterusso
Alberto Abaterusso
Articles (1615) 

2 Retail Stores Companies Release Earnings

Macy's and Canada Goose miss on earnings

August 14, 2019 | About:

Shares of Macy's Inc. (NYSE:M) plunged 12.71% to $16.90 in premarket trading Wednesday after missing consensus estimates on earnings for the second quarter of fiscal 2019, while matching on revenue.

Earnings per share were 28 cents versus estimates of 43 cents. Earnings per share decreased 47.2% year-over-year.

Revenue of $5.55 billion was 0.4% lower than the prior-year quarter.

Earnings and revenue were influenced by a rise in spring inventory levels due to a fashion miss in key private brands of women’s sportswear, lower warm weather apparel sales volumes and weaker demand from international tourists.

“We took markdowns to clear the excess spring inventory and are entering the fall season with the right inventory to meet anticipated customer demand,” Chairman and CEO Jeff Gennette said. “While we had seasonal inventory challenges in spring, there are many areas of the business that are performing well, notably our Destination Businesses. We continue to see healthier sales within our brick and mortar business, led by our Growth50 stores and Backstage expansion. Our digital business posted its fortieth consecutive quarter of double-digit growth, and mobile remained our fastest growing channel.”

During the quarter, the Cincinnati-headquartered department stores company reported that same-store sales on an owned basis rose 0.2%.

Moreover, gross margin was 38.8% of sales in the second quarter of fiscal 2019 versus 40.4% of sales in the second quarter of fiscal 2018. Operating income was 2.8% of sales in the second quarter of fiscal 2019 compared to 5.4% of sales in the second quarter of fiscal 2018.

For full fiscal 2019, the company reaffirmed flat annual revenue compared to full fiscal 2018 and lowered adjusted earnings per diluted share guidance to a range of $2.85 to $3.05 from the previous range of $3.05 to $3.25 and versus consensus estimates of $3.07.

The balance sheet had $674 million in cash and short-term securities, and $4.7 billion in total debt as of Aug. 3.

Macy's share price was $19.36 at close on Tuesday for a market capitalization of $5.98 billion. The share price decreased 35% so far this year. The 52-week range is $18.86 to $41.99.

The 14-day relative strength index is 30, suggesting the stock is near oversold levels.

Wall Street issued a hold recommendation rating for shares of Macy's, with an average price target of $22.80.

Currently, Macy's Inc. pays a 37.8-cent cash quarterly dividend per common share, generating a 7.83% forward dividend yield based on Tuesday’s closing price.

Shares of Canada Goose Holdings Inc. (NYSE:GOOS) tumbled 6.32% to $40.48 in pre-market trading Wednesday after the company announced first-quarter results for fiscal 2020.

The company recorded a loss per share of 27 cents Canadian dollars (24 U.S. cents). The loss increased 58.8% year-over-year.

First-quarter revenue totaled 71.1 million Canadian dollars ($63.4 million), up 59.1% from the prior fiscal year quarter and exceeded expectations by approximately 30 million Canadian dollars.

By geographical area, Canadian revenues increased 40.4%, U.S. revenues went up 15.8%, and internationally (Europe and rest of the world), revenues grew 79.7%.

“Fiscal 2020 is off to a great start with a strong performance in our first quarter, which delivered growth in every geography. As we continue to invest in capacity, we are well positioned to capitalize on the strong demand we see across our business,” President and CEO Dani Reiss said. “The affinity and desire we have seen for our seasonally relevant lightweight offerings tells us our product expansion is working, and combined with the volume of highly engaged consumers looking to get ahead of the upcoming fall/winter season, we believe our business has never been stronger as we report our smallest fiscal quarter.”

Further, gross profit margin was 57.5% in the first quarter of fiscal 2020 versus 64% in the first quarter of fiscal 2019. The decline was due to lower margin revenues.

Looking ahead to full fiscal 2020, the company expects adjusted earnings per diluted share to rise more than 24% and annual revenue to grow more than 20%.

Following a 1% decline over the past 12 months through Aug. 13, the share price closed at $43.2 Tuesday for a market capitalization of $4.72 billion. The 52-week range is $31.67 to $72.27.

The 14-day relative strength index is 50, suggesting the stock is neither overbought nor oversold.

Wall Street issued an overweight recommendation rating for shares of Canada Goose Holdings with an average price target of $50.21.

Canada Goose Holdings doesn’t pay a dividend.

Disclosure: I have no positions in any security mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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