Earnings Preview: Macy's

Macy's (M) is expected to report Q2 earnings Wednesday before the opening bell with a conference call scheduled for 10:30 am ET.

Guidance

Analysts are looking for a profit of 19c on revenue of $5.76B. The consensus range is 16c to 25c for EPS, and revenue of $5.66B to $5.8B, according to First Call. In May, Macy's forecast FY08 EPS $1.85 to $2.15 vs. First Call consensus of $1.86 and guided FY08 same-store sales down 1% to up 1.5%.

Analyst Views

An analyst at Zacks commented that shares have lost more than half of their value over the past few months as investors panicked over the liquidity position of the Bloomingdale's operator. The analyst said the company's FY08 earnings guidance is viewed as too optimistic by the Wall Street as Macy's struggles to trim costs and improve sales, which have suffered in the weak U.S. economy with middle-income shoppers pulling back on discretionary spending. 

While the environment remains challenging and Macy's may lack near term catalysts, a Buckingham analyst said valuation has drifted very close to a 10-year-low on "what we believe are unfounded liquidity concerns." The analyst noted that sales trends year-to-date at Macy's have outpaced department store competition, as company recently disclosed its that May and June SSS were down -1.9%, in line with projections, reaffirming confidence in the near term earnings outlook for Macy's.

On July 29, Macy's reported that a Long Island garment factory cited by the New York State Department of Labor for labor law violations was, in fact, not manufacturing goods for sale at Macy's.