Big earnings, sales miss for Macy’s

Macy’s reported disappointing earnings for its first quarter, as its sale continued to slide.



Macy's posted a first quarter profit of $71 million, or 23 cents a share, down from $116 million, or 37 cents a share, in the year-ago period. Excluding some costs, Macy's adjusted per-share profit fell to 24 cents from 40 cents, below analysts' expectations for 35 cents.



Revenue fell 7.5% to $5.34 billion, versus analysts estimates of $5.47 billion, which Macy’s attributed partly to store closings. Same-store sales fell 4.6%, more than expected. The retailer did not break out its online sales but said its digital platforms showed “continued strong growth” in the quarter.



Neil Saunders, managing director of GlobalData Retail, commented that the retailer’s disappointing results were not a reflection on new CEO Jeff Gennette, who took the reins from longtime chief executive Terry Lundgren in March. But they do underscore the scale of the challenge he now faces.



“Turning around Macy's is not a venture for the faint of heart,” Saunders said. “Overall, our sense is that Macy's now has a much clearer sense of direction and it has a rudimentary road map to help it get to where it wants to go. However, the distance it needs to travel over the next few years is enormous.” (For more of his comments, click here.)



Despite the quarterly miss, Macy’s affirmed its guidance for the year and sounded a positive note, saying the company’s performance was consistent with its expectations. It also said it was encouraged by the performance of pilot programs in categories such as women’s shoes, fine jewelry, and furniture and mattresses.



“We look forward to expanding these successful initiatives nationally this year and anticipate they will have a measurable impact on our performance starting in the second quarter, building through the fall,” said Gennette. “In 2017, Macy’s is focused on taking actions to stabilize our brick and mortar business, including the testing and iteration of additional pilot programs. At the same time, we will invest to aggressively grow our digital and mobile business, while continuing the integration of our online and offline experience to allow our customers to shop the way they live.”



In the first quarter, the company opened new Macy’s stores in Murray, Utah, and Los Angeles, as well as 10 freestanding Bluemercury beauty stores and 11 new Macy’s Backstage stores within existing Macy’s stores. Additionally, one Bloomingdale’s store opened in Kuwait under a license agreement with Al Tayer Group.



Macy’s announced the sale and intended closure of the Macy’s store at Temple Mall in Temple, Texas. Final clearance sales for the Temple Mall store, as well as the previously announced store closing at the Mall at Tuttle Crossing in Dublin, Ohio, will begin on Monday, May 15, 2017.