Macy's, Dollar General Q1 Profits Decline

(RTTNews) - Retailers Macy's, Inc. (M) and Dollar General Corp. (DG) reported on Thursday that net profits for the first quarter declined from last year, with Macy's topping estimates, while Dollar General missed it. Net sales at both retailers missed expectations.

Both Macy's and Dollar General also slashed their guidance for the full-year 2023 to reflect anticipated macroeconomic impacts to the consumer. However, Macy's said it remains confident in the business and its long-term growth prospects.

In pre-market activity on the NYSE, Macy's shares are down $0.47 or 3.46 percent to trade at $13.12, and Dollar General shares are plunging $20.89 or 10.39 percent to trade at $180.20.

Omni-channel fashion retailer Macy's reported that net income for the first quarter declined to $155 million or $0.56 per share from $286 million or $0.98 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $157 million or $0.56 per share, compared to $315 million or $1.08 per share in the year-ago quarter.

Net sales for the quarter declined 6.8 percent to $4.98 billion from $5.35 billion in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share on net sales of $5.04 billion for the quarter. Analysts' estimates typically exclude special items.

Comparable sales were down 7.9 percent on an owned basis and down 7.2 percent on an owned-plus-licensed basis. Digital sales decreased 8 percent, and brick-and-mortar sale declined 6 percent.

Macy's brand comparable sales were down 8.7 percent on an owned basis and down 7.9 percent, on an owned-plus-licensed basis.

Bloomingdale's brand comparable sales on an owned basis were down 3.9 percent and on an owned-plus-licensed basis were down 4.3 percent. Bluemercury brand comparable sales were up 4.3 percent on an owned basis.

Looking ahead to fiscal 2023, the company now projects adjusted earnings in a range of $2.70 to $3.20 per share on net sales between $22.8 billion and $23.2 billion. Previously, the company expected adjusted earnings in the range of $3.67 to $4.11 per share on net sales between $23.7 billion and $24.2 billion.

The Street is looking for earnings of $3.69 per share on net sales of $24.00 billion for the year.

On Wednesday, the board of directors of Macy's declared its regular quarterly dividend of 16.54 cents per share on its common stock, payable July 3, 2023, to shareholders of record as of the close of business on June 15, 2023.

Variety stores chain Dollar General reported net income of $514.38 million or $2.34 per share, down from $552.66 million or $2.41 per share in the prior-quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $2.38 per share for the quarter.

Net sales for the quarter increased 6.8 percent to $9.34 billion from $8.75 billion in the same quarter last year. Analysts expected net sales of $9.46 billion for the quarter.

The company said net sales increase was primarily driven by positive sales contributions from new stores and growth in same-store sales, partially offset by the impact of store closures.

Same-store sales increased 1.6 percent, driven by an increase in average transaction amount, partially offset by a decrease in customer traffic.

Looking ahead to fiscal 2023, the company now projects earnings per share to be between a decline of about 8 percent and flat on net sales growth of 3.5 to 5.0 percent, with same-store sales decline in the 1.0 to 2.0 percent range.

Previously, the company expected earnings per share growth in the range of about 4 to 6 percent on net sales growth of 5.5 to 6.0 percent, with same-store sales decline in the 3.0 to 3.5 percent range.

The Street is looking for earnings of $11.14 per share on net sales growth of 5.7 percent to $40.00 billion for the year.

The Company's guidance assumes no share repurchases in 2023, as compared to its previous expectation of share repurchases of approximately $500 million.

The Company is also reducing the number of expected new store openings in the pOpshelf format in 2023. As a result, the Company now expects to execute 3,110 real estate projects in the U.S., including 990 new store openings, 2,000 remodels, and 120 store relocations.

On Tuesday, the Company's Board of Directors declared an increased quarterly cash dividend of $0.59 per share on the Company's common stock, payable on or before July 25, 2023 to shareholders of record on July 11, 2023.

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