Macy’s swings to Q1 loss; not expecting another full COVID-19 shutdown

With nearly all its stores reopened, Macy’s expects a gradual recovery after posting a big loss for the first quarter when its stores went dark due to the COVID-19 pandemic. But it warned of uncertainty going forward as the virus flares up in new hotspots.

On its quarterly earnings call, the department store retailer said that sales are down again in states where COVID-19 is on the rise, such as Texas. it expects the pattern to continue. Chief executive Jeff Gennette told analysts that while Macy's  does not expect another full shutdown because of the virus, it has plans in place should it need  to close smaller groups of stores for a second time due to “regional flare-ups.” 

Gennette also said that,  Macy’s is taking a “conservative view” for the rest of year,  anticipating store sales will be down about 35% from last year. 

“I’m very hopeful that it will be better than the down 35, but we wanted to pick a prudent approach,” he said. 

Macy's posted a net loss of $3.58 billion, or $11.53 a share, for the quarter ended May 2, from net income of $136 million, or $0.44 a share, in the year-ago period. Excluding one-time charges items, such as $3.1 billion in asset impairment charges, the adjusted loss was $630 million, $2.03 per share, compared to analysts’ estimates of $2.03. 

As previously reported, revenue fell 45.2% to $3.02 billion in line with expectations.

Macy’s has reopened nearly all its locations. The retailer said its stores continued to perform ahead of expectations through May and June, and its digital sales remained strong across geographies. Macy’s also said it continues to expect a gradual sales recovery.

"While our stores are re-opened, we expect that the COVID-19 pandemic will continue to impact the country for the remainder of the year," said Gennette in a statement. "We do not anticipate another full shutdown, but we are staying flexible and are prepared to address increases in cases on a regional level. While we continue to see challenges ahead, we’ve taken the necessary actions to stabilize our business and give us financial flexibility. We are confident we have the right strategy and plans in place to navigate the shifting retail landscape,”

Macy's said it would not provide a financial outlook.