Macy\u2019s\u00a0delivered another quarter of mixed results on Thursday as investors wait and see how quickly CEO Tony Spring can pull off a turnaround of the business with\u00a0yet another activist\u00a0investor\u00a0looking to take the chain private.<\/p>\n
Across the business, which includes the Macy\u2019s banner, Bloomingdale\u2019s and Blue Mercury, comparable sales during the all-important holiday quarter were down 1.1%. But comparable sales across its owned and licensed businesses, plus its online marketplace, were up 0.2%, which is the highest the metric has been since the first quarter of 2022.\u00a0<\/p>\n
Plus, the so-called First 50 locations \u2014 the stores that Macy\u2019s is devoting more resources to as part of its turnaround plan \u2014 saw comparable sales up 0.8%, marking the fourth quarter in a row the metric has been positive.<\/p>\n
The two bright spots in an otherwise worse-than-expected set of results suggest Macy\u2019s turnaround is showing some signs of life \u2014 it just might not be working fast enough.<\/p>\n
For fiscal 2025, Macy\u2019s is expecting adjusted earnings per share of $2.05 to $2.25 and sales of between $21 billion and $21.4 billion, lower than Wall Street expectations of $2.31 per share and $21.8 billion, according to LSEG.<\/p>\n
Macy\u2019s shares fell slightly in early trading.<\/p>\n
Here\u2019s how the department store performed during its fiscal fourth quarter, compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:<\/p>\n
The company\u2019s reported net income for the three-month period that ended Feb. 1 was $342 million, or $1.21 per share, compared with a loss of $128 million, or a loss of 47 cents per share, a year earlier. Excluding one-time items including impairments and settlement and restructuring charges, Macy\u2019s reported earnings of $507 million, or $1.80 per share.\u00a0<\/p>\n
Sales dropped to $7.77 billion, down about 4% from $8.12 billion a year earlier. Like other retailers, Macy\u2019s benefited from an extra selling week in the year-ago period, which has skewed comparisons.\u00a0<\/p>\n
For the current quarter, Macy\u2019s is expecting adjusted earnings per share of between 12 cents and 15 cents and sales of between $4.4 billion and $4.5 billion, far below estimates of 28 cents and $4.71 billion, according to LSEG.<\/p>\n
On a call with analysts, chief operating officer and chief financial officer Adrian Mitchell said the company is taking a \u201cprudent\u201d approach to guidance given the fluid nature of the turnaround plan, cautious consumer spending and uncertainties created by recent tariff increases between the U.S. and major trade partners.<\/p>\n
\u201cIf we weren\u2019t in the environment that were operating in, I would be even more bullish on our potential,\u201d CEO Spring said during a call with analysts. \u201cBut I think prudency is important at this point in time.\u201d<\/p>\n
Macy\u2019s mixed results come just over a year into Spring\u2019s tenure as the legacy department store\u2019s chief executive and his three-year strategy to turn the business around. While Bloomingdale\u2019s and Blue Mercury saw another quarter of positive comparable sales, growing 4.8% and 6.2%, respectively, Macy\u2019s namesake banner continues to be the company\u2019s laggard with comps down 1.9%.\u00a0<\/p>\n
To address long-standing issues at the legacy banner, Spring has implemented an aggressive store closure plan that\u00a0includes shuttering 150 doors\u00a0and a strategy to fix its better-performing locations. As Macy\u2019s and other department stores have shrunk over the years, it\u2019s faced criticism for neglecting its stores, not having enough staff and falling behind on the retail essentials that are necessary to win in any environment.\u00a0<\/p>\n
Spring has started to address those issues by investing in 50 locations and providing better staffing, merchandising and visual presentation of the company\u2019s varied assortment.<\/p>\n
So far, the plan appears to be working. When Macy\u2019s added more staffing to the shoes and handbag departments at 100 test locations, those stores outperformed shops that didn\u2019t have those investments, Spring said Thursday.<\/p>\n
Storewide, the first 50 locations have continued to outperform the bulk of the chain, and in February, the company added an additional 75 stores to the program, bringing the total number of \u201creimagined\u201d locations to 125.<\/p>\n
\u201cPerformance of both the first 50 and the 100 test stores illustrate that when we invest in the customer experience, we can grow sales,\u201d said Spring. \u201cNow we must scale these changes in order to achieve our long-term goals.\u201d<\/p>\n
In fiscal 2024, comparable sales across Macy\u2019s business were still down by 0.9%, but that\u2019s an improvement of 5.1 percentage points compared to fiscal 2023. In the fourth quarter, comparable sales at the Macy\u2019s nameplate also saw a decline of 0.9%, up 3.8 percentage points from the prior year.<\/p>\n
Still, investors shouldn\u2019t expect a return to growth this year. The company is projecting comparable sales for the owned stores it\u2019s keeping open, plus its licensed businesses and online marketplace, to be down 2% to flat in fiscal 2025 compared to the prior year.<\/p>\n
Reimagined stores now make up 36% of the 350 Macy\u2019s locations that the business plans to keep open after it finishes closing underperforming locations. It will take time \u2014 and capital \u2014 to extend its strategy to the bulk of the chain. Spring has given the company two more years to pull it off, but whether investors have the patience to see the strategy play out \u2014 and whether macroeconomic conditions will slow it down \u2014 remains to be seen.\u00a0<\/p>\n
In December, activist investor Barington Capital revealed it has a position in Macy\u2019s and wants the company to cut spending, explore selling its luxury brands and take a hard look at its real estate portfolio. It\u2019s the fourth activist push at the department store in the last decade.<\/p>\n
Like the activists that had come right before it, Arkhouse and Brigade, many suspect that Barington is mainly after Macy\u2019s lucrative real estate portfolio and is more interested in juicing it for profit than doing the work necessary to revitalize the chain. Still, Macy\u2019s must act in the interest of shareholders and if it\u2019s not doing enough to return value quickly an activist could eventually win out.<\/p>\n
Macy\u2019s on Thursday announced its intent to resume share buybacks under its remaining $1.4 billion share repurchase authorization, \u201cmarket conditions pending.\u201d\u00a0<\/p>\n
\u201cBuilding on our momentum, we continue to elevate the customer experience, deliver operational excellence and make prudent capital investments,\u201d said Mitchell. \u201cWe remain committed to generating healthy free cash flow and returning capital to shareholders through share buybacks and predictable quarterly dividends.\u201d\u00a0<\/p>\n<\/p>\n
Macy\u2019s\u00a0delivered another quarter of mixed results on Thursday as investors wait and see how quickly CEO Tony Spring can pull off a turnaround of the business with\u00a0yet another activist\u00a0investor\u00a0looking to take the chain private. Across the business, which includes the Macy\u2019s banner, Bloomingdale\u2019s and Blue Mercury, comparable sales during the all-important holiday quarter were down […]<\/p>\n","protected":false},"author":0,"featured_media":15680,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-15679","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/15679","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=15679"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/15679\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/15680"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=15679"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=15679"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=15679"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}