Some retail weakness persisted late this week with earnings season underway as retailers grapple with high inventories and consumer spending cutbacks. Dollar General tumbled after its Thursday results and forecast while Macy's reversed higher following its release. Target received a downgrade from JPMorgan on Thursday. Meanwhile, JWN stock bounced after Nordstrom topped quarterly estimates late Wednesday.
Macy's Slashes Forecast
Macy's adjusted earnings tumbled 48% to 56 cents per share while sales fell 7% to $4.98 billion for its first-quarter results early Thursday. FactSet analysts expected earnings of 45 cents per share on $5.013 billion in sales.
Comparable sales fell 7.2% for the period, worse than analyst forecasts for a 5.5% decline.
Despite beating Wall Street estimates, Macy's slashed its full-year outlook as it anticipates macroeconomic conditions for consumers to worsen. Macy's expects net sales for the year to range from $22.8 billion to $23.2 billion, down from its previous forecast of $23.7 billion to $24.2 billion.
The company also lowered its adjusted earnings outlook to $2.70 to $3.20 per share compared with its prior range of $3.67 to $4.11 per share.
FactSet predicts full-year earnings at $3.69 per share on $23.73 billion in sales.
M stock rallied 12.2% Friday. Shares climbed 1.2% Thursday after initially retreating 3% in early trading. Shares fell as much as 10% premarket. Macy's stock tumbled 25% year to date.
Dollar General Earnings
Dollar General earnings fell for the first time in three quarters. Earnings slid 2.9% to $2.34 per share. Net sales growth slowed after accelerating for four consecutive quarters, climbing 6.8% to $9.34 billion. The results were just shy of FactSet earnings estimates of $2.38 per share on $9.47 billion in sales.
Dollar General noted that the macroeconomic environment is more challenging than previously anticipated, which the company believes is having a significant impact on consumer spending levels and behaviors.
The discount retailer lowered its net sales forecast to range from 3.5% to 5% growth, from previous expectations of 5.5% to 6%. Dollar General slashed its outlook, expecting earnings to be flat to down 8%. It previously guided 4%-to-6% earnings growth from the $10.68 per share reported last year.
For the year, FactSet expects earnings of $11.20 per share on $39.99 billion in sales.
DG stock rose 2.6% Friday after diving 19.5% Thursday following results. Shares are down 33.6% so far this year.
Target Downgrade
JPMorgan downgraded Target stock to neutral from overweight early Thursday and cut its price target for TGT stock to 144 from 182. The firm believes the consumer is "broadly weakening." And wallet shares, or dedicated consumer expenses, are shifting away from goods, which represent 51% of Target sales, JPMorgan analyst Christopher Horvers wrote in a note to clients.
Target's market share is positive on a three-year basis, but losing ground when looking at the one-year view. That market share loss could accelerate into the back-to-school season and linger in the holiday season due to consumer pressures and recent company controversies, Horvers wrote, which could turn company traffic negative after 12 consecutive positive quarters.
Target stock rose 1.6% Friday to recover its Thursday losses following its downgrade. TGT shares unraveled 18.2% since its May 17 earnings report. Target topped first-quarter views but warned inventory shrink will bite into profitability and lowered second-quarter forecasts.
Nordstrom Earnings Rise
Luxury department chain Nordstrom reported adjusted earnings rose to 7 cents per share for its first-quarter results late Wednesday compared with a loss of 6 cents a year ago. Sales dropped 10.9% to $3.18 billion. Analysts polled by FactSet expected a loss of 10 cents per share on $3.12 billion in sales.
The company reported a diluted loss per share of $1.27 for the period, which included a $1.92 per share impact from winding down operations in Canada.
Nordstrom maintained its full-year outlook and sees revenue falling 4% to 6% as consumer spending drops and sales slow. It guided adjusted earnings between $1.80 and $2.20 per share, excluding costs related to closing its Canadian businesses. FactSet anticipates an earnings jump of 18.3% to $2 per share on a 4.9% sales decline to $14.77 billion.
JWN stock swung 9.1% higher Friday after surging 4.8% Thursday. Shares are up 8.3% on the year.
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