Macy's Earnings: What to Watch

By Suzanne Kapner Features Dow Jones Newswires

Macy's Inc., a bellwether for department store chains, is scheduled to report second-quarter results before the market opens on Thursday.

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Here's what you need to know.

EARNINGS FORECAST: Analysts are expecting earnings of 46 cents a share, according to FactSet, a big increase compared with 3 cents a share a year ago, when asset impairment and store closing charges weighed on results.

REVENUE FORECAST: Sales are expected to total $5.52 billion for the three months ended July, a 6% drop from the $5.87 billion of a year ago. Factored into the sales decline is the closing of roughly 100 stores.

WHAT TO WATCH:

SAME-STORE SALES: Macy's same-stores sales have declined in each quarter since January 2015. While analysts are predicting another drop -- consensus calls for a 3.3% decrease in the second quarter -- that should be an improvement over the 5.2% decline in the first quarter.

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GROSS MARGIN: Macy's warned during its analyst day in June that its second quarter gross margin rate would likely be 1 percentage point below year ago levels. Analysts will be looking for color around that figure. Did the extra discounting drive sales, or help clear winter merchandise?

INVENTORY: Retailers typically want inventory changes to align with sales trends. Merchandise inventories fell nearly 2% in the first quarter compared with the year ago period, and analysts will be looking to see whether they continued to shrink. Failure to reduce inventory when sales decline could be a sign that Macy's is sitting on too much unsold goods.

REAL ESTATE: A year ago Macy's disclosed plans to close 100 stores. Analysts will be listening closely for further updates on additional store closings, as well as ongoing plans to unlock value from its real estate. Analysts will also be looking for any evidence that Macy's is able to retain customers after closing stores by shifting them online or to other nearby locations.

(END) Dow Jones Newswires

August 09, 2017 08:14 ET (12:14 GMT)