Q2 shows Macy’s stock got ‘ahead of itself’

Wall Street is worried about Macy’s again.

Shares of the nation’s biggest department-store chain plunged 16 percent — dragging down other mall anchors’ stocks with them — after it said sales for the second quarter dropped 1.1 percent, to $5.6 billion, while comparable sales rose just 0.5 percent compared with a 4.2 increase in the first quarter.

The weak gains contrast with govern-

ment data released Wednesday showing that overall retail sales grew 6.4 percent in July — a month in which Macy’s experienced its “strongest comp in a year,” said Macy’s Chief Executive Jeff Gennette on an earnings call.

Expectations for Macy’s have been high — maybe too high, say industry experts — as Macy’s shares were up nearly 60 percent this year, hitting a 52week high on Tuesday.

“I suspect that the stock got ahead of itself,” said retail consultant Jan Kniffen.

Macy’s beat Wall Street’s estimates

and raised its guidance for the year, but management flagged several speed bumps for 2018. Those include higher shipping costs due to its revamped loyalty program, construction at its stores in which it’s building off-price Backstage boutiques, and tough comparisons with a strong fourth quarter in 2017.

Top brass blamed the weaker sales on its friends and family promotion, which moved sales to the first quarter this year. But even when it accounted for the shift, Macy’s estimated that compa-

rable sales were up 2.9 percent for the second quarter, less than the previous quarter.

“We think [that figure] likely needed to be a touch stronger,” said Gordon Haskett analyst Chuck Grom.

Menswear and kids-related merchandise were standout sellers for Macy’s, as were fragrances, Gennette said.

“Fragrances was one of our strongest categories this year. We’re selling jumbo [sets], and we expect that to continue,” Gennette said.