Dive Brief:

• Macy's, which reported their 2nd quarter earnings earlier this week, revealed a disappointing outcome, hampered by struggles in inventory management and forecasting.  

• Paula Price, Macy's CFO, said the company is moving in the right direction despite its share price in the last quarter hitting its lowest level since 2010. “While the second quarter was a challenge, I’m confident that we’re on the right track to accomplish our short- and long-term objectives,” she said in the call.

• Macy's CEO Jeff Gennette said the inventory problems that have plagued the company are getting under control, which should help it improve its performance going into the second half of the year. “The second quarter gross margin was tough, but we now have the inventory at the right levels,” he said.

Dive Insight:

Gennette pointed to a number of factors “inside and outside” the company’s control in explaining why the department store chain has suffered several consecutive years of slowing sales — even hitting its lowest-ever stock value in January. 

Gennette acknowledged that the company's earnings per share — at $0.28 — were “well below” expectations, but part of that stemmed from issues out of their control.   

Price pointed to "slow warm weather product sell-through and an accelerated decline in international tourism that [Macy’s and subsidiary Bloomingdale’s] needed to put ourselves in good shape for the fall season" as among the broader trends affecting their sales. She also cited global events including Brexit and the tariffs imposed on China. 

More internally, Price mentioned “a [fashion miss] in women’s sportswear and private brands." 

It’s not entirely Macy’s fault, analysts said in a Bloomberg report, pointing out that “department stores have long been one of the most challenging corners of the retail industry.”

In their comments reported by Bloomberg, analysts said that Macy's executives did “practically nothing in the second quarter to dispel notions of how heavy a lift it will be for the chain to return to relevance.”

In the earnings call, Price said Macy’s finance team should be able to better control its inventory management, which, in Q2, fell into disarray, by implementing heavy markdowns. Her team, she said, “took these additional markdowns that got our inventory down to nearly flat on a comp basis, which is a really good place to be, as we head into the fall season.”

Many are saying Price and Gennette did a poor job forecasting what they thought their sales would be going into Q3 — something both admitted in the call. Gennette said that while the first two quarters of 2019 were “challenging,” he was “proud of the work the team has done to drive the business in this dynamic external environment and course-correct when needed.”

Analysts and commentators are less optimistic. Yahoo! Finance editor Brian Sozzi said “disastrous” second quarter earnings prove that the chain is “dead” in his article Wednesday, called “What’s Happening at Macy’s Is Absolutely Terrifying.”