Macy’s Slashes Guidance Again, Twice In One Month

Macy’s Slashes Guidance Again, Twice In One Month

Tyler Durden’s pictureSubmitted by Tyler Durden on 01/29/2016 08:18 -0500
http://www.zerohedge.com/news/2016-01-29/macys-slashes-guidance-again-twice-one-month

Less than 4 weeks ago, on January 6, we reported of the “Macy’s Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed”, where in addition to the massive layoffs announced by the iconic retailer, we learned that as a result of the “historically warmer weather”, the company’s prior guidance was no longer valid. Here is what it said in early January:

Macy’s, Inc. is not expecting a major change in sales trend in January and expects a comparable sales decline on an owned plus licensed basis in the fourth quarter of 2015 to approximate the 4.7 percent decline in November/December (from previous guidance of down between 2 percent and 3 percent for the fourth quarter). This calculates to guidance for comparable sales on an owned plus licensed basis in the full-year 2015 to decline by approximately 2.7 percent (from previous guidance of down 1.8 percent to 2.2 percent).

Earnings per diluted share for the full-year 2015 now are expected in the range of $3.85 to $3.90, excluding expenses related to cost efficiencies announced today and asset impairment charges associated primarily with spring 2016 store closings. This compares with previous guidance in the range of $4.20 to $4.30. Updated annual guidance calculates to guidance for fourth quarter earnings of $2.18 to $2.23 per diluted share, excluding charges associated with cost efficiencies and store closings. This compares with previous guidance for earnings per diluted share of $2.54 to $2.64 in the fourth quarter. Earnings guidance for 2015 includes an expected $250 million gain on the sale of real estate in downtown Brooklyn.

Well, moments ago Macy’s issued a press release in which it announced that as a result of the completion of a “real estate transaction with Tishman Speyer that will enable the re-creation of its Brooklyn store on Fulton Street” (there is always something), it has just cut guidance once again:

Given this timing change in accounting for the transaction, Macy’s management has revised its earnings guidance for the fourth quarter and full-year 2015, which previously has assumed the entire gain would be booked in the fourth quarter of 2015. Earnings per diluted share for the full-year 2015 now are expected in the range of $3.54 to $3.59, excluding expenses related to cost efficiencies announced earlier in January and asset impairment charges associated primarily with spring 2016 store closings. This compares with previous guidance in the range of $3.85 to $3.90. Updated annual guidance calculates to guidance for fourth quarter earnings of $1.85 to $1.90 per diluted share, excluding charges associated with cost efficiencies and store closings. This compares with previous guidance for earnings per diluted share of $2.18 to $2.23 in the fourth quarter.

At least Macy’s didn’t blame the “historical snow storm” in January for this latest cut.

And just like that, in the span of several months, with the January 6 interim step, Macy’s has lowered its full year outlook by 16% from $4.25 to $3.57. And since the stock is now trading near the highest levels since early November when the guidance cuts began, we can only imagine that all those betting on multiple expansion will be richly rewarded at a time when the US consumer is starting to finally feel to full impact of the manufacturing, at first, recession that is spreading across the nation.

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