Executive Summary

• Macy’s reported adjusted 3Q16 EPS of $0.17 versus the consensus estimate of $0.41. The miss was driven by SG&A expenses. Total revenues were $5.63 billion, inline with analysts’ expectations. Comparable-store sales declined by 3.3% on an owned basis and by 2.7% on an owned-plus-licensed basis.
• Sales results accelerated in the third quarter relative to the first half of the year and management expressed confidence that it will be able to reach its targets for the fourth quarter, owing in part to improved trends in the apparel business.
• The company reaffirmed its full-year EPS guidance of $3.15–$3.40 versus consensus of $3.37. Comps on an owned-plus-licensed basis are expected to be (2.5)%–(3.0)% versus (3.0)%–(4.0)% previously. Comps on an owned basis are expected to be 50basis points lower.