Macy’s Inc. reported earnings and sales that beat analysts’ expectations amid a sales uptick in the days leading up to Christmas.
Net income totaled $340 million, or $1.09 a share, in the quarter ended February 1, down from $740 million, or $2.37 a share, in the year-ago period. Adjusted per-share earnings came to $2.12, easily topping Street estimates of $1.96.
Sales fell to $8.34 billion from $8.455 billion, also ahead of the $8.32 billion analysts had expected. Same-store sales fell 0.6%, slightly less than expected.
"Taken as a whole, 2019 did not play out as we intended for Macy's, Inc." CEO Jeff Gennette said in a statement. "However, we executed well during the Holiday 2019 season. We were pleased with the significant trend improvement in the fourth quarter, including a meaningful sales uptick in the 10 shopping days before Christmas."
Gennette added that 2020 will be a transition year as the company makes significant changes to its business. Earlier this month, Macy’s announced a major restructuring https://chainstoreage.com/macys-big-cost-cutting-moves-will-close-125-storest plan, dubbed Polaris, to restore profitability and growth. The plan includes the closing of 125 stores during the next year and a reduction of its corporate workforce. The retailer also is accelerating its private label development, expanding its off-price Backstage concept to more locations and is testing a smaller-format concept, Market by Macy’s.
“We have a clear perspective of where Macy’s, Inc. and our brands – Macy’s, Bloomingdale's, and Bluemercury – fit into American retail today,” Gennette said.
In comments, analyst Neil Saunders said that while Macy’s new Polaris strategy seems like a “sensible blueprint,” the chain has suffered by ignoring low-hanging fruit.
“Too many stores suffer from a lack of basic disciplines – merchandising is terrible and even tasks like dusting fixtures are overlooked,” said Saunders, managing director of GlobalData Retail. “In essence, Macy’s is still failing on retail 101 and this does not bode well for its prospects in more advanced studies.” For more of his analysis, click here.
Macy’s is maintaining its guidance for fiscal 2020. It is still expecting adjusted EPS of $2.45 to $2.65 and sales of $23.6 billion to $23.9 billion. Same-store sales are expected to be down 2.5% to down 1.5%.