The Macy’s logo is seen at its store in Herald Square in Recent York City on Jan. 19, 2024.
Michael M. Santiago | Getty Images
Macy’s on Tuesday said sales fell nearly 2% in the vacation quarter, because the 166-year-old department store operator unveiled its technique to get back to growth.
Here’s what Macy’s reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly generally known as Refinitiv:
- Earnings per share: $2.45 adjusted vs. $1.96 expected
- Revenue: $8.12 billion vs. $8.15 billion expected
Macy’s — which incorporates its namesake banner, Bloomingdale’s and Bluemercury — said it expects sales to stay stagnant. It projected net sales of between $22.2 billion and $22.9 billion for this fiscal yr, down from $23.09 billion in 2023. It anticipates comparable sales, which take out the impact of store openings and closures, will range from a decline of about 1.5% to a gain of 1.5% compared with the year-ago period on an owned-plus-licensed basis and including third-party marketplace sales.
Yet the corporate’s latest CEO, Tony Spring, laid out a brighter outlook for the next fiscal yr and the way Macy’s plans to get there. Spring is the previous CEO of Macy’s higher-end department store Bloomingdale’s. He took the helm Feb. 4, weeks after Macy’s announced layoffs and because it faced pressure from activist investors.
In an interview with CNBC, he said the corporate is taking a clear-eyed have a look at its business — particularly its struggling namesake stores.
“Yes, there are headwinds, actually on discretionary categories and the middle-income consumer, but we take responsibility for what we control,” he said. “Let’s put higher products into our stores. Let’s ensure it’s merchandised appropriately at an honest value. After which we have now more opportunity for conversion and more [market] share.”
Macy’s shares closed greater than 3% higher Tuesday.
Macy’s strategy ahead
As a part of the retailer’s push to woo shoppers and restore investor confidence, Macy’s said it should make big changes to its store footprint. Macy’s plans to shut about 150 unproductive locations and will step up investments within the roughly 350 namesake locations that can remain open.
It plans to focus more on selling luxury goods by opening about 15 latest Bloomingdale’s stores and at the very least 30 latest Bluemercury stores over the following three years. It would also remodel roughly 30 existing stores of the wonder chain during that point.
In a news release Tuesday, Macy’s said it should also take a tough have a look at methods to operate more efficiently — corresponding to scrutinizing the network of warehouses used for its e-commerce business.
Within the fiscal yr that starts in early 2025, Macy’s said, it expects low-single-digit comparable sales growth on an annual basis, including owned, licensed and marketplace sales. It said it expects capital spending to fall below 2024 levels and free money flow to drop to pre-pandemic levels. Its outlook doesn’t include any potential impact from a proposed bank card late fee ruling by the federal government.
Macy’s has faced scrutiny from activist investors Arkhouse Management and Brigade Capital Management, which made a rejected bid to purchase the retailer. Arkhouse recently nominated a slate of nine directors to Macy’s board.
Fourth-quarter sales dip
For the fiscal fourth quarter that ended Feb. 4, Macy’s swung to a lack of $71 billion, or 26 cents per share, from net income of $508 million, or $1.83 per share, a yr earlier. The losses included $1 billion of impairment and restructuring costs related to Macy’s plans to shut about 150 locations, that are a part of its turnaround strategy.
Revenue fell from $8.26 billion within the year-ago period. Digital sales declined 4% compared with the prior-year quarter, and brick-and-mortar sales were roughly flat.
Across the corporate, comparable sales on an owned-plus-licensed basis fell 4.2% from the year-ago period. That was higher than the 5.8% decline that analysts expected, in keeping with LSEG.
Macy’s continued to be the weakest store banner — a trend reflected in the corporate’s plans to shut a lot of its stores. The namesake store’s comparable sales on an owned-plus-licensed basis dropped by 4.7%, as the ladies’s shoes and cold weather apparel and accessories categories struggled. Beauty and Macy’s off-price business, Backstage, were stronger performers within the quarter.
Bloomingdale’s and Bluemercury, the 2 store chains that the parent company plans to expand, each fared higher in the vacation quarter.
At Bloomingdale’s, comparable sales declined 1.6% on an owned-plus-licensed basis, as the boys’s and designer handbag businesses got here in soft.
Bluemercury’s comparable sales rose 2.3%, as shoppers bought skincare items and color cosmetics.
Net bank card revenue also took successful, as Macy’s said it tumbled by 26% from the prior yr to $195 million as the corporate handled higher net bank card losses.
To date this yr, shares of Macy’s have fallen nearly 1%. The corporate’s stock has underperformed the roughly 6% gains of the S&P 500 throughout the same period. Shares of Macy’s closed Tuesday at $19.95, bringing the corporate’s market value to $5.47 billion.
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