Earnings Preview: Macy's Looks for Stability in Q3

Shares of Macy's (NYSE: M) plunged three months ago, after the department store giant reported disappointing results for the second quarter of fiscal 2019. While comp sales rose 0.3% year over year, gross margin plunged to 38.8% from 40.4% a year earlier. That move caused adjusted earnings per share to plummet to $0.28 from $0.70 in the prior-year period. Excluding asset sale gains, adjusted EPS would have fallen from $0.59 to $0.27.

Several factors contributed to this margin wipeout. Most notably, management pointed to a "fashion miss" in the key women's sportswear category. In addition, a combination of high inventory and slow sales early in the quarter forced Macy's to take big markdowns.

Macy's also reduced its full-year EPS guidance by $0.20, because of its weak Q2 performance. As a result, investors have low expectations heading into the company's third-quarter earnings report, due out on Thursday morning. Here's what Macy's investors should be looking for this week.

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Source Fool.com