Macy`s Inc (NYSE:M) is scheduled to report its fiscal second-quarter earnings on Wednesday, Aug. 12 before the stock market opens. Estimize analysts are predicting EPS of $0.77, two cents above the Wall Street consensus. Last quarter, Macy’s had EPS of $0.56, down 7% YoY. Estimize is also predicting higher revenues than Wall Street at $6.261B vs. $6.255B. Last quarter, revenue was $6.232B, down 1% YoY. After last quarter’s earnings, Macy’s Chairman and Chief Executive Terry Lundgren claimed the company fell short due to severe weather and the slowdown in West Coast ports. However, he was optimistic about the future, predicting that certain categories such as dresses and “active categories” as well as the new Plenti loyalty program would show positive results in the future. Moreover, the acquisition of luxury beauty and spa retail chain, BlueMercury, is also expected to boost earnings this quarter. Lastly, Macy’s has a lot of valuable real estate under their belt, owning several properties across the country. Macy’s will look to monetize these properties in an appropriate manner to increase assets.
Although Lundgren ended the first-quarter conference call on an upbeat note, stating the future would be more positive due to several new initiatives, there are other issues that could negatively impact the upcoming earnings results. Some of these factors include a decrease in tourism sales, lower handbag sales– which the firm calls the “Kors effect” referring to the Michael Kors' (NYSE:KORS) handbags– and changing customer trends. Moreover, Macy’s aggressive pricing to fend off competition could too weigh on margins in the upcoming quarter.
So will Lundgren’s optimism be verified tomorrow morning, or will the several negative influences be too strong to overcome? It is hard to say. Macy’s is kicking off the second quarter earnings season for department stores, and the results will not only be telling for the future of the company, but for the retail industry as a whole.