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.
The retailer said it expects sales to stay stagnant. It projected net sales of between $22.2 billion to $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 latest CEO Tony Spring, who took the helm in February, 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.
In a news release, Spring described the strategy as “a powerful call to motion” and said it “challenges the establishment to create a more modern Macy’s.”
As a part of the retailer’s push to woo shoppers and restore investor confidence, Macy’s said it’s going to make big changes to its store footprint. Macy’s plans to shut about 150 unproductive locations and to prioritize investing in about 350 other namesake locations.
It plans to focus more on selling luxury goods by opening about 15 latest Bloomingdale’s stores and no less than 30 latest Bluemercury stores over the following three years. It can also remodel roughly 30 existing stores of the wonder chain during that point.
Macy’s had already announced five store closures and greater than 2,300 layoffs last month. It also said last yr that it could confide in 30 smaller versions of its namesake stores in strip malls over the following two years.
In a news release on Tuesday, Macy’s said it’s going to also take a tough have a look at the right way to operate more efficiently – reminiscent of 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, which incorporates its namesake banner, Bloomingdale’s and Bluemercury, has faced scrutiny from activist investors Arkhouse Management and Brigade Capital Management, who made a rejected bid to purchase the retailer. Arkhouse recently nominated a slate of nine directors to Macy’s board.
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 referred to as Refinitiv:
- Earnings per share: $2.45 adjusted vs. $1.96 expected
- Revenue: $8.12 billion vs. $8.15 billion expected
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% in comparison 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 response to 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 lads’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.
Thus far this yr, shares of Macy’s have fallen about 4%. The corporate’s stock has underperformed the roughly 6% gains of the S&P 500 in the course of the same period. Shares of Macy’s closed Monday at $19.30, bringing the corporate’s market value to $5.29 billion.
That is breaking news. Please check back for updates.