Macy’s Inc., impacted by higher levels of markdowns to clear spring merchandise and customers pulling back on spending, reported second-quarter top- and bottom-line declines but said the outcomes were higher than expected.

The web loss got here to $22 million for the quarter ended July 29, in comparison with a $275 million profit within the year-ago period. The loss included a non-cash settlement charge related to the transfer of pension obligations for certain retirees and beneficiaries.

Diluted loss per share of $0.08 and adjusted diluted earnings per share of $0.26 last quarter in comparison with diluted EPS of $0.99 and adjusted EPS of $1 within the second quarter of 2022.

Earnings before interest, taxes, depreciation and amortization were $221 million in the newest quarter, in comparison with $614 million within the year-ago quarter.

Net sales of $5.13 billion declined 8 percent from the $5.6 billion generated within the second quarter of 2022.

In pre-market trading Tuesday morning, Macy’s stock price was down about 1.6 percent to $14.49.

“Within the second quarter, we delivered better-than-expected top and bottom-line results,” said Jeff Gennette, the outgoing chairman and chief executive officer of Macy’s Inc., said in a press release Tuesday. “Our teams surgically implemented clearance markdowns and promotions to effectively clear spring seasonal receipts and ensure fresh assortments for the autumn and holiday seasons.”

“We proceed to see uncertainty within the macroeconomic environment. We’re leveraging our robust data science tools to refine inventory composition, while reading and reacting to shifting consumer preferences to fulfill demand,” Gennette continued. “Looking ahead, we’re committed to fortifying our core business and improving our customer experience while investing in our five growth vectors. We imagine these advancements, enabled by our strong talent, will drive our relevancy and long-term success as a contemporary department store.”

Macy’s growth initiatives include growing and “reimagining” private brands; off-mall expansion via the Market by Macy’s, Bloomie’s and Bloomingdale’s outlet smaller formats; online marketplace expansion; luxury acceleration, and personalization initiatives in offerings and communications with customers.

Gennette will retire in February 2024 and will probably be succeeded by Macy’s Inc. president Tony Spring, the previous CEO of Bloomingdale’s. The retailer is deep in a search process to rent a latest Bloomingdale’s CEO.

By division:

By channel, brick-and-mortar sales decreased 8 percent versus the second quarter of 2022. Digital sales decreased 10 percent versus the second quarter of 2022. Comparable sales were down 7.3 percent, on an owned-plus-licensed basis.

The corporate also reported that inventories were down 10 percent year-over-year and down 18 percent to 2019, “reflecting ongoing disciplined inventory management and the clearance of excess spring seasonal product. The corporate continues to deal with ensuring that merchandise inventories are current, contain compelling product, and are at the suitable receipt levels based on expected sales demand.”

Bank card revenues were negatively impacted by an increased rate of delinquencies across all stages of aged balances throughout the portfolio. “While the corporate had expected delinquencies to rise as a part of the normalizing credit environment, the speed at which the rise occurred for the corporate and the broader bank card industry for the reason that company’s first-quarter earnings call was faster than expected. This negatively impacted second-quarter results and led to a rise within the portfolio’s bad debt outlook.

Gross margin rate for the quarter was 38.1 percent, down from 38.9 percent within the second quarter of 2022.

Merchandise margin declined 130 basis points, on account of heightened levels of clearance markdowns and promotions needed in comparison with the prior yr to clear through spring seasonal product. Unfavorable category mix shifts and a shift within the timing of shortage recognition were partially offset by higher inbound freight charges from the corporate’s costs savings efforts. 

Goal last week also reported a quarterly sales decline on account of consumers hesitant to spend and the backlash by some shoppers to the shop’s Pride merchandise. Nonetheless, Walmart, buoyed by its strong grocery assortment and values, reported gains on the highest and bottom lines.