Macy’s posts first profitable quarter in a year on strong holiday, digital sales
Macy’s Inc. ended a year of “unprecedented disruption” on a very upbeat note, topping Street estimates and reporting quarterly sales improvements across all three of its brands.
The department store giant, which cited its success in cutting inventory levels and reducing deep discounting during the quarter, said sales could top $20 billion in 2021, which will be a year of “recovery and rebuilding.”
Macy’s reported net income of $160 million, or $0.50 per share, for the quarter ended Jan. 30, down from $340 million, or $1.09 per share, in the year-ago quarter. Adjusted EPS came in at $0.80 per share, crushing analysts’ estimates of $0.11 per share.
Sales fell to $6.78 billion from $8.34 billion, but beat Street estimates of $6.48 billion. Same-store sales on an owned basis fell 17% and were down 17.1% on an owned-plus-licensed basis. Analysts had expected a 23% decline.
Digital sales rose 21%, with online accounting for 44% of net sales. The retailer said about 25% of digital sales were fulfilled from its stores.
“Performance was driven by the home, beauty, jewelry and watch categories, growth in digital sales and by acquiring new customers," stated Jeff Gennette, Macy’s chairman and CEO. "We anticipate annual digital sales to reach $10 billion within the next three years, and that digital will become an even more profitable contributor to our business."
Macy’s said that its quarterly inventory was down 27% from the year-ago period and it exited the year in a “healthy” inventory position. The company said it aggressively addressed slow-selling merchandise, reduced excess inventory levels and improved visual presentation in stores during the quarter.
Gennette said that Macy’s has made progress on the Polaris transformation strategy we introduced a year ago, and that it is accelerating several elements, including its focus on digital and omnichannel sales, improving customer value and building the infrastructure to support the growth of its business.
“We believe these actions will propel us to stronger performance in 2021 and beyond,” he added. “2020 was a year of unprecedented disruption. We are incredibly proud of our team for their hard work to make our customers feel safe and comfortable when shopping with us. And we are grateful to our brand partners for navigating through the pandemic with us.”
Macy’s ended the year with a strong liquidity position and continued de-levering of the balance sheet. It had approximately $1.7 billion in cash as of year-end, “benefiting from efficiencies gained in working capital and a refocusing of capital spend on highest priority projects.”
Macy’s forecasts fiscal 2021 sales to fall within a range of $19.75 billion to $20.75 billion. It expects adjusted earnings per share to fall within a range of $0.40 to $0.90.