Macy’s earnings soar, lifts outlook; talks store closures
Macy’s reported a strong third quarter with earnings and sales that beat analysts’ estimates as it added 4.4 million new customers. It also hiked its full-year outlook.
The department store giant also announced plans to launch a digital marketplace that will expand its assortment. It’s expected to launch in the second half of 2022.
On the company’s earnings call, CFO Adrian Mitchell said Macy’s will announce 10 new store closings in January. These are in addition to the 125 locations that, as previously reported, are scheduled to close by 2023. Of that number, some 60 are still open. Michell told analysts that the company is reconsidering when it closes those locations.
“The delayed closure of certain stores allows us to maintain a physical presence in the market, which is critical to our top line growth,” Mitchell said. “Digital performance is stronger in the markets where we have stores.”
Macy’s net income totaled $239 million, or $0.76 per share, in the quarter ended Oct. 30, after a loss of $91 million, or $0.29 per share, in the year-ago period. Adjusted earnings per share of $1.23 crushed analysts’ estimates for $0.31 per share.
Sales rose to $5.44 billion were up from $3.99 billion last year, ahead of estimates of $5.20 billion. Comparable sales rose 37.2% on an owned basis and were up 35.6% on an owned-plus-licensed basis, up 8.9% and up 8.7%, respectively, versus 2019.
Digital sales increased 19% year versus the year-ago period and 49% versus the third quarter of 2019. Online accounted for 33% of total sales, down 5% from last year but up 10% from 2019. Forty-one percent of Macy’s new customers in the quarter came through digital.
“Our company delivered another strong quarter and exceeded our expectations on both top and bottom lines,” said Jeff Gennette, chairman and CEO. “Consumers continue to spend, and we successfully offered a wide range of expanding merchandise assortment to meet their growing demand. Looking ahead to the fourth quarter, we remain a special place for holiday shopping, and our robust omnichannel ecosystem is showing resilience in the face of labor and supply chain challenges and enables us to meet customer shopping needs with speed and convenience.”
The retailer said that categories that were solid throughout the pandemic, including home, fragrances, jewelry, watches and sleepwear, continued to see strong sales performance. Occasion-based categories, such as dresses, men’s tailored and luggage, continued to recover. Emerging categories, such as toys and pets, showed encouraging results and the company continues to expand on those categories and related brands.
By brand, Macy’s comparable sales increased 35.1% compared to the third quarter of 2020 and 8.4% compared to the same period in 2019. Categories that were solid throughout the pandemic, including home, fragrances, jewelry, watches and sleepwear, continued to see strong sales performance. Occasion-based categories, such as dresses, men’s tailored and luggage, continued to recover. Emerging categories, such as toys and pets, showed “encouraging results: and the company said it continues to expand on the categories and related brands.
Bloomingdale’s comparable sales rose 38.5% compared over the year-ago period and 11.2% compared to the 2019 period. Bluemercury comparable sales were up 39.5% compared to the third quarter of 2020, but down 2.2% compared to the third quarter of 2019.
Macy's raised its sales guidance for the full year to $24.12 billion to $24.28 billion from $23.55 billion to $23.95 billion. The company now expects adjusted earnings per share of $4.57 to $4.76, up from $3.41 to $3.75.