What a difference a yr makes. And that’s actually true for Macy’s Inc. and the vacation season.

“A yr ago everybody was talking concerning the supply chain, spooking customers into early shopping. Should you didn’t buy it immediately, there could be nothing left for Christmas. This yr, with all of the press about inventory gluts, there aren’t any concerns about running out of inventory before the vacation,” Jeff Gennette, Macy’s Inc. chairman and chief executive officer, told WWD in an interview Tuesday.

He spoke right after the retailer reported that its net income dove by almost 55 percent to $108 million, or $0.39 a diluted share, from $239 million, or $0.76 a diluted share, within the year-ago quarter. This compares to diluted earnings per share of $0.01 within the third quarter of 2019.

The industry’s modified inventory situation, in addition to inflation and the increasingly promotional retail landscape, explains why Macy’s and other big retailers, including Kohl’s and Goal, saw third-quarter declines and witnessed a slowdown in spending last month.

Macy’s reported total sales within the three-month period ended Oct. 29 declined 3.9 percent to $5.23 billion from $5.44 billion a year-ago, but inched up 1.1 percent from the third quarter of 2019. Comparable third-quarter sales this yr were down 2.7 percent on an owned-plus-licensed basis.

Inventories were up 4 percent versus 2021, and down 12 percent from 2019 levels, reflecting ongoing planning and provide chain discipline considering the widespread reports of inventory gluts this yr.

Still, Macy’s third-quarter results beat the expectations of Wall Street, which on Thursday pushed the retailer’s stock price up 15 percent, or $2.96, to $22.67.

Meanwhile, Kohl’s reported Thursday that its third-quarter net income fell 60 percent to $97 million, or 82 cents a diluted share, down from $243 million, or $1.65, a yr ago. Revenues decreased 7 percent to $4.3 billion from $4.6 billion. Shares of Kohl’s increased 5.4 percent to $31.42.

Goal on Wednesday reported $712 million in third-quarter profits, a steep decline from the year-ago $1.48 billion in profits. Goal’s top-line results were barely more favorable with $26.5 billion in total revenues, compared with $25.6 billion a yr ago.

At Macy’s, Gennette said sales began drooping in mid-October. While traffic in stores and on the corporate’s web sites since then has been much like last yr, the selling conversion rate has been down, at 26 percent or 27 percent, in comparison with 30 percent last yr, Gennette said.

He described what could evolve right into a seesaw pattern for holiday sales, indicating that he’s hoping to see a “more pronounced spike” in business throughout the Black Friday-Cyber Monday period, and a “higher pitch” within the business between Thanksgiving and Christmas, in comparison with 2021. Across retailing last yr there was widespread early holiday shopping, even before Halloween, resulting in a stretched out season of gift shopping.

With the business slowdown in recent weeks, Gennette said Macy’s is taking deeper markdowns on summer weight merchandise, though he underscored that inventories are where he wants them to be.

“Macy’s, Bloomingdale’s and Bluemercury are super fresh. Freshness is the lifeblood of a fashion retailer,” Gennette said. “Our stock-to-sales ratio may be very healthy.

“We’ve really built up our gift inventories,” Gennette added, noting the rollout of Toys “R” Us shops inside Macy’s, and that beauty and apparel are in great shape.

He said 55 percent of the whole inventory is latest, which is 30 points ahead of 2019. As well as, “We’ve the next concentration of exclusives.”

Still, with the increasing uncertainty around how much Americans will spend on gifts this holiday season, “We are going to take the required markdowns so we’re clean heading into 2023,” Gennette said.

“For everyone, with the cumulative effect of inflation, it’s good to be mindful of the quantity of inventory that’s on the market,” he said. “I feel good concerning the way we are able to react and what we are able to control.”

Gennette said anything dress up, anything with sparkle, velvets, luxury, tailored sportswear, sweaters, fleece, travel-related merchandise, women’s shoes, fragrances, effective jewelry (notably diamond studs) and cosmetics gift sets are among the many areas seeing double digit sales gains.

Alternatively, sleepwear, casual sportswear, lively and soft home — categories that excelled throughout the pandemic — are down double digits. 

Key aspects that ought to help Macy’s Inc. navigate through holiday 2022: the colder weather; the Toys “R” Us rollout, the launch of the marketplace on macys.com in late September, thereby expanding brand and product offerings, and latest and improved pricing and markdown management systems.

The Macy’s CEO also cited the corporate’s “healthy” receipt reserve so buyers can jump on hot categories and types as they emerge.

Inside the Macy’s marketplace, units per order are above the macys.com average. “Marketplace further cements our status as a one-stop shop,” he said. A marketplace on bloomingdales.com will launch next yr.

Gennette revealed one other strategy that ought to support the vacation performance. Inside 35 Macy’s malls across the country, 30,000-square-foot mini distribution centers have been opened. The mini DCs, he said, will mitigate labor costs helping profits, and supply faster deliveries. Macy’s made room for them on upper floors by downsizing space in under-productive areas akin to home, kids, intimate and casual women’s apparel.

Macy’s reaffirmed its forecast for $24.34 billion in annual sales this yr, and raised its earnings expectations to $4.07 to $4.27 per diluted share, from $4 to $4.20.

Last quarter, earnings before interest, depreciation and amortization got here to $392 million, versus $757 million within the third quarter of 2021.

By division, Macy’s comparable sales last quarter were down 4.4 percent on an owned basis and down 4 percent on an owned-plus-licensed basis.

Bloomingdale’s comparable sales on an owned basis were up 5.3 percent, and on an owned-plus-licensed basis were up 4.1 percent.

Bluemercury comparable sales were up 14 percent on an owned and owned-plus-licensed basis.

Gross margin for the quarter was 38.7 percent, down from 41 percent within the third quarter of 2021. The decline was attributed to increased promotions and everlasting markdowns inside the Macy’s brand, as the corporate sold through slower moving categories, including casual apparel, soft home and warmer weather seasonal goods.

“Macy’s results show its relatively good operating execution, particularly around inventory management in a volatile yr and compared with weaker results as reported today by Kohl’s,” David Silverman, senior director at Fitch Rankings, wrote in a report issued Thursday. “While Macy’s sales were down modestly with margins weaker as expected against a robust 2021 performance, inventory is up only modestly in comparison with last yr. More manageable inventory levels relative to peers should limit Macy’s have to aggressively mark down merchandise but additionally allow it to purchase more popular styles in-season. Kohl’s weaker results, as preannounced recently, demonstrates the corporate’s greater challenges navigating the complex environment.” 

“Our Polaris strategy is working. Within the third quarter, we achieved solid top-line results and a robust beat to our bottom-line guidance. Macy’s brand position as a method and fashion source resonated with our customers, while luxury continued to outperform at Bloomingdale’s and Bluemercury,” Gennette said in his prepared statement. “Retail is detail, and our talented and agile team are executing well to compete. We all know the buyer is under increasing pressure and has decisions on where to spend. As a number one gifting destination with fresh inventory across the worth spectrum, we’re ready to satisfy our customers’ needs this holiday season.”

As Macy’s Inc. chief financial officer Adrian Mitchell added, “We’re operating from a position of strong financial health — with appropriate levels of inventory, a robust balance sheet with ample liquidity, investment grade credit metrics and glued rate of interest debt in a rising rate of interest environment. We’ve the tools, data-driven processes and talented teams to administer through this uncertain time and are committed to long-term, profitable growth.”