The Macy’s corporate logo is seen at the Macy’s store in Herald Square on January 19, 2024 in New York City. Macy’s has announced that it will lay off approximately 2,350 employees, representing about 3.5% of its workforce. The company says it will also close five stores in order to adapt to the era of online shopping. (Photo by Michael M. Santiago/Getty Images)
Michael M. Santiago | Getty Images News | Getty Images
The company’s share rose more than 4% in pre-market trading.
On an earnings call with investors, CEO Tony Spring said the company is in the “early innings” of transforming its namesake stores. As the retailer increases its investment in 50 Macy’s stores, customers have responded by visiting more frequently and buying more when they do, he said.
For example, Macy’s made sure that those stores had sales associates ready to help customers in the fitting rooms, the shoe department, and in the jewelry store. The company introduced new brands such as Donna Karan and expanded other brands such as French Connection, Free People and Hugo Boss. Spring added that Macy’s has tried to give shoppers more reasons to visit, such as offering personal styling sessions, fashion shows and perfume bottle engravings.
“We need more diversity,” he said. “We need less repetition. We need more attention within the assortment and I think that makes a difference in the customer’s reception of the stores.”
Here’s what Macy’s reported for the three-month period ending May 4 compared to what Wall Street expected, based on a poll of analysts conducted by LSEG:
- Earnings per share: 27 cents adjusted versus 15 cents expected
- Revenue: $4.85 billion adjusted versus $4.86 billion expected
Macy’s net income in the first quarter fell 60% to $62 million, or 22 cents per share, compared with $155 million, or 56 cents per share, in the same quarter last year.
Net sales decreased From $4.98 billion in the same period last year.
Macy’s now expects net sales to be between $22.3 billion and $22.9 billion, down from $23.09 billion in 2023. It expects comparable sales, which take the impact of store openings and closings, to range from a decline of about 1% to a gain of 1.5% on a owned-plus-license basis including third-party market sales. It had previously expected comparable sales to decline by up to 1.5%.
It expects adjusted earnings per share to be between $2.55 and $2.90, upping its previous forecast of $2.45 to $2.85.
Macy’s is getting smaller as it tries to boost sales again. The store operator, which includes Bloomingdale’s and cosmetics chain Bloomingdale’s, said earlier this year that it would close about 150 of its namesake stores. That’s more than a quarter of Macy’s locations of the same name. It has already announced the closure of five stores and layoffs of more than 2,300 workers in January.
However, the retailer said it would invest in parts of the business that performed better, including the approximately 350 Macy’s stores that will remain open. It plans to open more Bloomingdale’s and Bluemercury locations, and smaller Macy’s stores in suburban malls.
In the first quarter, Bloomingdale’s and Bluemercury continued to perform better than the company’s namesake brand. At Bluemercury, comparable sales, a measure that takes the impact of store openings and closings, rose 4.3%. At Bloomingdale’s, comparable sales increased 0.3% on a proprietary plus licensing basis, including third-party marketplace sales.
At Macy’s, comparable sales were down 0.4% on a proprietary plus licensing basis, including the third-party market.
The company said 150 underperforming Macy’s stores — which will close by early 2027 — dragged down results.
At the approximately 350 Macy’s stores that will remain open, comparable sales rose 0.1% on a proprietary-plus-licensed basis. In the first 50 of those stores that received additional investment, comparable sales were better: up 3.4% on an ownership-plus-licensing basis.
On the company’s earnings call, CFO and Chief Operating Officer Adrian Mitchell said the company assumes in its forecast that consumers “will remain under pressure through the rest of the year.”
But he added that Macy’s expects to get a boost this year as it moves forward with its online and in-store transformation strategy.
Along with taking a hard look at its store footprint, Macy’s has tried to attract more customers, including more millennial and Gen Z shoppers, by launching new exclusive brands and overhauling existing ones.
Macy’s faced another challenge: a takeover bid by an activist investor. Arkhouse Management and Brigade Capital have made a bid to buy Macy’s and take the company private. Arkhouse also waged a proxy fight, but settled the fight in April when Macy’s agreed to add two new board members.
Macy’s shares closed Monday at $19.10, bringing the company’s market value to $5.26 billion. As of Monday’s close, the company’s stock was down about 5% so far this year, lagging the S&P 500’s gain of about 11% over the same period.
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