Macy's, Best Buy warn of pullback in consumer spending
STORY: Shares of Macy’s surged 11% in early trading Thursday after the department store chain beat estimates for holiday quarter results and forecast annual profit largely above analysts’ expectations.
But like many retailers, Macy’s offered steep discounts over the holidays to clear out excess inventory and attract inflation-weary consumers.
As a result, margins fell 2 percentage points. That, however, is rosy compared to many of its rivals, like Kohl’s - whose margins plummeted 10 percentage points over the same period.
And while Macy’s beat expectations on its full-year profit forecast, it did warn that consumers’ discretionary spending would be under pressure across all income tiers – something Walmart and Target have already flagged.
Best Buy on Thursday joined that chorus – and issued a cautious annual earnings forecast as uncertainty about the U.S. economy has tempered expectations for sales of TVs, laptops and other electronic goods.
The company sees no relief this year, forecasting comparable sales to fall 3 to 6%. Analysts on average were expecting no more than a 2% decline.
Best Buy will also close or remodel some of its larger stores, and open more smaller-sized outlets that sell used and refurbished electronics to pull in more budget-oriented shoppers.
Shares were up 1% Thursday in early trading.