(News Bulletin 247) – The New York company has reduced its revenue and sales growth targets for the current financial year. Its second-quarter sales were also disappointing. On the other hand, Target, another famous American chain, is jumping on Wall Street after good results.

Known for its annual New York parade featuring balloons depicting popular culture characters (such as Snoopy, Yoda and SpongeBob SquarePants), Macy’s is suffering on Wall Street on Tuesday, with its stock down 12% in early trading.

The group, which claims to own the largest store in the world in terms of surface area, with its Herald Square branch in Manhattan, suffered from a disappointing publication.

In the second quarter of its 2024-2025 fiscal year, which will end next January, the company reported a 3.8% decline in revenue to $4.9 billion. The company’s CEO, Tony Spring, believes that his company delivered “a robust performance in a challenging consumer environment.”

The company’s sales, however, fell short of expectations. According to a LSEG consensus, cited by Reuters, analysts had expected revenues of $5.12 billion, with a more modest decline in comparable data of 0.23%.

Earnings per share, another indicator closely watched by the Wall Street market, came in at 53 cents, versus expectations of 30 cents.

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Lowered targets

Most importantly, the company lowered some of its current fiscal year guidance. Macy’s is forecasting revenues of $22.1 billion to $22.4 billion, compared to $22.3 billion to $22.9 billion previously. On a comparable basis, the company now expects sales to decline by between 2% and 0.5%. Previously, Macy’s had forecast a decline of between -1% and +1.5%. The company also kept its earnings per share guidance unchanged.

The adjustment reflects “a more demanding consumer and a more intense promotional environment compared” to the company’s prior guidance, Macy’s said. “The company believes the outlook range provided provides the flexibility needed to address continued uncertainty in the consumer discretionary market,” the company added.

These results contrast with the robust results of the Walmart giant, which had delighted the market last week. The stock had risen by more than 6.5% after the publication.

Target doesn’t miss its mark

Macy’s also suffered from the comparison, this Wednesday, with Target, another large American distributor, whose range positioning is considered lower than Macy’s.

Target reported strong results, with comparable sales up 2% in the second quarter of its 2024-2025 fiscal year, which ends in January 2025. Optimistic about the stock, Bank of America had only expected a 1% increase.

Target’s sales increase marks a return to growth after a 3.7% decline in the previous quarter. The company notably recorded a 3% year-over-year increase in store traffic in the second quarter.

And, unlike Macy’s, the company said it saw “significant” improvement in sales in discretionary categories, with apparel sales up 3 percent.

“We committed to returning to growth in the second quarter, and the team delivered, while increasing operating margins (operating margin increased from 4.8% to 6.4%, editor’s note) and earnings per share by more than 40% compared to last year,” Target CEO Brian Cornell said in a statement.

A question of price?

Following this publication, the company maintained its forecast for growth in its revenues in comparable data for the whole year (between 0% and 2%), while warning that it thinks that the increase would rather be located on the lower half of this range. The group, on the other hand, raised its target for earnings per share, anticipating a range of 9 dollars to 9.7 dollars, against 8.6 dollars to 9.6 dollars previously.

On Wall Street, Target shares jumped 16% at the start of trading, contrasting with the fall of Macy’s.

Reuters reports that the New York-based company is struggling to attract buyers to its high-end products in an economic climate marked by still-high interest rates. The chain has been forced to offer discounts.

“Unlike Target and Walmart, Macy’s is in a world that doesn’t always resonate with consumers who are more price-conscious,” Art Hogan, chief market strategist at B Riley Wealth, was quoted as saying by the agency.

In July, Macy’s executives decided to end talks with a consortium of investors for a potential buyout, judging that the investors’ proposal did not sufficiently value their company. The stock fell 11.7%.