Macy’s profits from wealthy shoppers, Kohl’s feels inflation pinch

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U.S. equity markets were down sharply before the opening bell on mixed retail reports and continued lackluster guidance during earnings calls. The Dow was down over 300 points and the other indices were done similarly.

In economic news, Initial Jobless Claims were fewer than expected, posting 222K vs 225k forecasted. Building Permits were up 1.526M vs. 1.512 forecasted.

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In stocks, Bath & Body Works (BBWI) shot up 25.54% on Earnings per Share that doubled estimates. Macy’s (M) was up 15.04%, and Satixfy Communications (SATX) was up a whopping 69.05%.

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In cryptocurrencies, both Bitcoin (16,660) and Ethereum (1,208) traded flat in intraday trading.

Macy’s Profits from Wealthy Shoppers, Kohl’s Feels Inflation Pinch

By Uday Sampath Kumar and Deborah Mary Sophia

(Reuters) -Upscale U.S. retail chain Macy’s Inc raised its annual profit forecast on Thursday on resilient demand for high-end clothes and beauty products, while the inflation squeeze on lower-income shoppers forced rival Kohl’s Corp to scrap its forecast.

Luxury goods sales have held up for Macy’s as higher-income shoppers, eager to get back to social events after the pandemic, splurge their savings on pricier handbags, perfumes, clothing and gifts heading into the holiday season.

But Kohl’s withdrew its 2022 sales and profit forecasts, as the company, which caters to more lower-income customers and stocks fewer luxury goods, took a hit from weakening demand due to rising prices.

“The Kohl’s customer is being hit by inflation a lot more than Macy’s,” said Jane Hali & Associates analyst Jessica Ramirez.

“Shoppers are also now traveling and returning to offices, and Macy’s has a better collection of those products. You’re not going to Kohl’s for dresses,” she said.

Shares of Macy’s rose 8% in premarket trading, while Kohl’s fell 4%.

Macy’s inventory levels were just 4% higher in the third quarter from a year ago, thanks to heavy discounts to clear the excess stocks of casual and athleisure apparel. In contrast, Kohl’s inventories were 34% higher.

Macy’s said its decision to bring in holiday merchandise early this year was also helping it match shopping trends and keep inventories lean.

Macy’s raised its fiscal 2022 adjusted profit forecast to$4.07 to $4.27 per share from $4 to $4.20. Excluding items, it earned 52 cents per share in the quarter ended Oct. 29, beating estimates of 19 cents, according to Refinitiv data.

(Reporting by Deborah Sophia and Uday Sampath in Bengaluru; Editing by Arun Koyyur)

Thursday Closing Bell, November 17 (4 PM ET)