Well-off consumers who usually shop at Macy's Inc have continued to spend enthusiastically into the fall season. The company revealed on Wednesday that these shoppers have significantly contributed to a 3% year-over-year increase in comparable store sales, the largest surge in three years.
The affluent clientele have been actively buying for the holiday period. Still, CEO Tony Spring highlighted it's still unclear whether this zeal will persist through the remainder of the festive season.
Spring addressing a conference call highlighted, "Our customer base, predominantly comprising middle to upper income, remained buoyant and engaged in the third quarter." Adding that, "We're satisfied with the commencement of the fourth quarter."
It's substantial to note that the economy has been primarily driven by the spending of high-income shoppers. Nevertheless, some business leaders are cautious in predicting the continuity of this trend. Despite this uncertainty, Macy's forecast for the full fiscal year has been revised upward following better-than-expected third-quarter results.
However, Spring points out that they anticipate customers will be "more choiceful" in the fourth quarter. He explained this considering that the "aspirational" customers, who sporadically indulge in shopping despite not routinely affording it, may potentially hold back on their spending.
Interestingly, the results of the company's luxury outpost, Bloomingdale's, surpassed those of Macy's flagship brand, reflecting the split nature of the economy. While an optimistic stock market has buoyed affluent customers, others have been cautious due to a sluggish job market and inflation concerns.
With a keen focus on the "luxury customer of the future," Bloomingdale's is engaging with more luxury brands. "We have introduced several significant designer brands, including Totême, TWP, Zimmerman, Victoria Beckham, Christian Louboutin, and Roger Vivier," Spring mentioned.
The company's quarterly revenue dipped slightly year-over-year to $4.7 billion but exceeded analysts' consensus estimate of $4.6 billion. Macy's adjusted earnings amounted to $26 million, more than double from the $11 million reported a year earlier. Although Macy's shares fell about 1% on Wednesday, they have appreciated approximately 35% so far this year.