Macy’s misses bad, excuses abound
Macy’s Chairman and CEO Terry Lundgren offered plenty of reasons why the company’s first quarter sales were worse than expected – but also noted the confluence of factors that caused the disappointing results are largely behind the company.
“Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels,” Lundgren said. “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. The omnichannel reorganization in our merchandising, planning and marketing organizations announced in January and February also caused some temporary disruption as executives in those areas learned new roles and procedures. Fortunately, most of these short-term issues are largely behind us.”
Macy’s said sales in the first quarter ended May 2 totaled $6.232 billion, a decrease of 0.7%, compared with sales of $6.279 billion in the same period last year. Same store sales were down 0.1%. Operating income totaled $409 million, or 6.6% of sales, compared with $443 million or 7.1% of sales for the same period in 2014. The company reported earnings of 56 cents per diluted share, compared with earnings of 60 cents per diluted share in the first quarter of 2014.
The company also announced a 15 percent increase in its dividend on common stock and a $1.5 billion increase in its share repurchase authorization.
“Looking ahead, we have many reasons to be encouraged about the growth prospects for our business. We are excited by the range of new initiatives being put in place today – both organic and through our new business development organization. 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,” Lundgren added.
The company says it also plans to open as many as 18 new Bluemercury stores this year.
“We also are seeing new business initiatives begin to germinate. We are excited about plans to accelerate the expansion of Bluemercury through its free-standing stores, omnichannel presence and private brand placement within Macy’s beauty departments. While these new growth initiatives are early in development, we are moving fast to test, learn and bring the most successful ideas to scale quickly,” he added.
Looking ahead, Macy’s said it expect same store sales growth of approximately 2% in fiscal 2015. The company continues to expect total sales growth of approximately 1% in 2015. The company also reiterated its guidance for earnings per diluted share in fiscal 2015 of $4.70 to $4.80.
In fiscal 2015, the company expects to open a new Macy’s store in Puerto Rico, a Bloomingdale’s in Hawaii, 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).
In fiscal 2016, a new Macy’s store has been announced for opening in 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, Calif. In 2018, a new Bloomingdale’s is scheduled to open in Norwalk, Conn. 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.