:max_bytes(150000):strip_icc()/GettyImages-2247814647-64339395c7074725b0caee4d5f04151b.jpg "Macy’s Says Wealthier Shoppers Are Spending. It’s Unclear That Will Last.")
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Key Takeaways
- Macy’s relatively affluent customers are “resilient” and “engaged” as holiday shopping gets underway, CEO Tony Spring said.
- The company’s gains were largely driven by its luxury department store, Bloomingdale’s, and “aspirational” customers may not stick around, Spring said.
Well-heeled consumers are maintaining their pace as the holidays approach, Macy’s says.
The middle- and upper-income households that tend to shop at Macy’s Inc. (M) spent briskly this fall, the parent company of Bloomingdale’s and Bluemercury as well as Macy’s said Wednesday. They shoppers helped the retailer record a 3% year-over-year increase in comparable store sales—its biggest gain in three years.
The affluent have been actively shopping for the holidays, though CEO Tony Spring said it’s too soon to say whether the momentum will last through the end of the season.
“Our customer base, which is predominantly middle to upper income, remained resilient and engaged in the third quarter,” Spring said, according to a conference call transcript made available by AlphaSense. “We’re pleased with the start of the fourth quarter.”
Why This News Matters
Higher-earners have been driving the economy. Business leaders seem hesitant to say this will continue, but most executives aren’t seeing weakness among affluent consumers.
Macy’s raised its outlook for the full fiscal year after its third-quarter numbers exceeded expectations. Still, the forecast assumes consumers will be “more choiceful” in the fourth quarter, in part, because “aspirational” customers may pull back, Spring said. (The term “aspirational” refers to those who don’t have the means to comfortably or routinely shop with a store, but may sometimes splurge there.)
The company’s luxury outpost, Bloomingdale’s, posted stronger results than its namesake brand, highlighting what’s sometimes called the K-shaped economy. Affluent customers have been comfortable spending, their mood lifted by an upbeat stock market, but a sluggish job market and inflation have given others pause. Comparable store sales at Bloomingdale’s rose 9% year-over-year, Spring said.
Bloomingdale’s is wooing the “luxury customer of the future” by working with more luxury brands, Spring said. “We continued to expand the breadth of the brands we offer introducing a number of important designer brands, including Totême, TWP, Zimmerman, Victoria Beckham, Christian Louboutin and Roger Vivier.”
The high-end department store’s customers bought men’s apparel, fine jewelry and shoes, Spring said. Macy’s stores also had strong sales in men’s clothing, watches, fine jewelry and handbags, he said.
Macy’s said quarterly revenue dipped slightly year-over-year to $4.7 billion, ahead of the $4.6 billion analysts’ consensus estimate compiled by Visible Alpha. Adjusted earnings totaled $26 million—more than double the $11 million reported a year earlier and well above the $37 million loss analysts expected, according to Visible Alpha.
Macy’s shares fell about 1% on Wednesday. They’re up about 35% so far this year.
