(Reuters) -U.S. upscale department store chain Macy’s Inc raised its annual profit forecast on Thursday on resilient demand for high-end suits, gowns and beauty products as wealthier shoppers were undeterred by inflation.
Luxury goods sales have held up relatively well for Macy’s as higher-income shoppers, eager to get back to social events after the pandemic, splurge their savings on pricier handbags, perfumes and clothing.
Rival Kohl’s Corp, however, 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.
Shares of Macy’s rose 8% in premarket trading, while Kohl’s shares fell 4%, with the company also blaming the sudden departure of top boss Michelle Gass as a reason for pulling the forecasts.
Macy’s inventory levels were just 4% higher, thanks to heavy discounts to clear the excess stocks of cheaper casual and athleisure apparel. In contrast, Kohl’s inventories were 34% higher in the third quarter.
“Our middle-income customers continued to purchase fewer items per trip and trade down to value-oriented private brands,” Kohl’s said in a statement.
Macy’s said it expects fiscal 2022 adjusted profit of $4.07 to $4.27 per share compared with its previous forecast of $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)
