Macy’s: Q4 tops forecasts; ports dispute to hurt sales; expanding Bluemercury

Cincinnati -- Macy's fourth quarter net income fell to $793 million from $811 million a year earlier, topping analysts expectations. However, the retailer issued a disappointing profit outlook for the current year, and sounded a warning for the current quarter, saying sales and margins would be impacted by shipping delays related to the West Coast ports dispute.



"At year-end we were not yet experiencing a problem from the West Coast port slowdown,” Macy’s CFO Karen Hoguet said on the chain’s quarterly earnings call. “Since then, however, our inventory levels have been negatively impacted, particularly in apparel and accessories. Approximately 12% of our first-quarter merchandise receipts are being delayed and this will have some impact on our sales, gross margin, and expense in the first few months of the year, but we have incorporated our expectations into the guidance we've provided today."



On the call, Hoguet also addressed new formats, including a Macy’s off-price concept.



“We think it may just because it may help bring a whole new customer to Macy's,” she said, adding that the Bloomingdale's outlet business has served as an entry point for the customer.



“So it is very possible we could find that with Macy's as well,” she added.



Macy’s net sales in the all-important holiday quarter, ended Jan. 31, rose to $9.36 billion from $9.2 billion, below expectations, as the retailer continues to deal with sluggish sales.



Same-store sales, including licensed businesses, rose 2.5%. Excluding licensed businesses, same-store sales were up 2%.



"Having now reached such a healthy profitability rate, we are shifting our resources and energies to growing the topline faster while maintaining this high profitability rate level," CEO Terry Lundgren said in a company statement.



Lundgren said Macy’s has established an entirely new part of its organization to lead innovation and new growth initiatives – including offprice, international and new store formats.



“We expect some of these new activities to enter start-up phases later in 2015, and we remain committed to succeeding in a test-and-learn environment where the best and most promising ideas can be ramped up quickly,” he said.



The chief executive said that the company expects to complete its acquisition of Bluemercury quarter, with an initial focus on accelerating the growth of Bluemercury’s freestanding stores in urban and suburban markets, as well as on accelerated omnichannel growth and offering Bluemercury products in Macy’s stores.



In fiscal 2015, the company expects to open a new Macy’s store in Ponce, Puerto Rico, and a Bloomingdale’s in Honolulu.



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, Florida, and a new Bloomingdale’s in San Jose.



In addition, new Macy’s and Bloomingdale’s stores are planning to open in Abu Dhabi, United Arab Emirates, in 2018 under license agreements.



For the year, Macy's reported sales of $28.1 billion, up 0.6% from sales of $27.9 billion in 2013. Same-store sales increased 1.4%.