Macy’s falls short in Q1; to open 32 new stores by 2018
Cincinnati -- Bad weather, decreased spending by international tourists due to the strong U.S. dollar and delayed merchandise shipments from the West Coast port slowdown all contributed to Macy’s missing Wall Street projections for profit and revenue in the first quarter of fiscal 2015. Net income fell 13% to $193 million, from $224 million in the same quarter a year earlier.
Net sales dropped about 1% to $6.23 million, from $6.28 million. Same-store sales declined 0.7%.
“We fell short because of a confluence of factors,” said Terry J. Lundgren, Macy’s chairman and CEO. “Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy’s and Bloomingdale’s stores, including New York City, Chicago, Las Vegas and San Francisco.”
Macy's also noted that the reorganization of its merchandising, planning and marketing area caused some temporary disruption as executives in those areas took on new responsibilities.
However, Macy’s is still pursuing an aggressive new store strategy. In fiscal 2015, as previously announced, the company expects to open a new Macy’s store in Ponce, Puerto Rico, a Bloomingdale’s in Honolulu, a new Bloomingdale’s Outlet store in Manhattan, four Macy’s Backstage off-price stores in the New York metro area, and a total of 18 Bluemercury locations (including four opened in the first quarter). For fiscal 2016, a new Macy’s store has been announced for opening in Kapolei, Hawaii, along with a replacement Macy’s store in Los Angeles.
Announced new stores for fiscal 2017 include new Macy’s and Bloomingdale’s in Miami, and a new Bloomingdale’s in San Jose, California. In 2018, a new Bloomingdale’s is scheduled to open in Norwalk, Connecticut. In addition, new Macy’s and Bloomingdale’s stores are planning to open in Abu Dhabi, United Arab Emirates, in 2018 under license agreements with Al Tayer Group.
“We are excited by the range of new initiatives being put in place today – both organic and through our new business development organization,” said Lundgren. “Within our existing business, this includes an intensification of focus in our top 150 stores, major growth trends in active categories and accelerating success in dresses, the vanguard merchandise category in our omnichannel reorganization. The launch of our new Plenti loyalty rewards program last week was very strong, far exceeding our expectations. Our new Thalia Sodi private brand in ready-to-wear, shoes and fashion jewelry clearly is resonating with customers and selling very well.”
The company also announced a 15% increase in its dividend on common stock and a $1.5 billion increase in its share repurchase authorization. Macy’s expects total sales growth of 1% and same-store sales growth of slightly less than 2% in fiscal 2015.