Macy’s Q1 earnings, sales fall but beat Street; cites progress in turnaround
Macy’s sales and earnings declined in the first quarter but the department store giant reported that its turnaround efforts are beginning to yield positive results.
Earlier this year, Macy’s revealed plans to close about 150 namesake stores and prioritize investment in approximately 350 “go-forward” nameplate locations amid the continued expansion of its smaller-format stores. To date, Macy’s has updated 50 “go-forward” stores to encouraging results.
“At the Macy’s nameplate, go-forward business performance was led by our First 50 locations, which achieved comparable sales growth year over year and are a leading indicator for our go-forward fleet,” said Tony Spring, who took the reins of the company in February. “Although early days, our investments in product, presentation and experience are gaining traction and reinforce our belief that longer-term, Macy’s, Inc. can return to sustainable, profitable growth.”
“The first 50 represent what we can do when we deliver on our customers’ expectations," Spring told analysts on the cmpany's earnings call. He noted that customers and vendors are responding well to improvements in merchandising that have gone into the go-forward stores.
“During the first quarter we enhanced merchandising through elevated product rollouts. Full-price and planned promotional sell-throughs of new and expanded assortments has been strong," Spring said on the call.
Macy's net income fell 60% to $62 million, or $0.22 per share, for the quarter ended May 4, compared with $155 million, or $0.56 per share for the year-ago period. Adjusted earnings were $0.27 per share, easily topping analysts’ estimates of $0.16 per share.
Net sales slipped 2.7% to $4.85 billion, ahead of estimates of $4.82 billion. It was the eighth consecutive quarter of sales declines.
Same-store sales, fell 1.2%, less than the Street had expected. Macy’s nameplate banner continues to be its weakest link, with same-store sales down 1.6%. Same-store sales at Bloomingdale’s rose 0.8% and were up 4.3% at Bluemercury.
Net revenue from Macy’s media network rose $8 million to $37 million amid increased vendor engagement.
For fiscal 2024, Macy’s raised it full-year guidance ranges for adjusted earnings per share to $2.55 to $2.90 from $2.45 to $2.85. It expects net sales of $22.3 billion to $22.9 billion compared to its previous estimates of $22.2 billion to $22.9 billion.
Macy’s said the updated outlook reflects both its first-quarter results and an evolving economic backdrop.
“The company continues to view 2024 as a transition and investment year, reflecting investments in key customer-focused strategic initiatives, supported by the company’s strong balance sheet,” Macy's said.