Macy's weighed down by initiatives in Q4
As Macy’s undergoes aggressive changes to better compete in an omnichannel retailing world, the company reported a decline in profit for the fourth quarter.
For the quarter ended Jan. 31, profit fell to $793 million from $811 million. Per-share earnings were $2.26 a share, up from $2.16 a share a year earlier. Same store sales grew 1.7% Revenue increased 1.8% to $9.36 billion.
“We are shifting our resources and energies to growing the topline faster while maintaining this high profitability rate level. As described in various announcements made over the past 45 days, we have now fully aligned our management team to fuel organic growth within our existing omnichannel business as customer shopping patterns evolve at both Macy’s and Bloomingdale’s,” Macy’s Chairman and CEO Terry J. Lundgren said. “Concurrently, we have established an entirely new part of our organization to lead innovation and new growth initiatives – including off-price, international and new store formats.”
Over the past several weeks Macy’s has been announcing management changes, acquisitions and other restructuring efforts to better align itself with the needs and wants of customers. On a conference call with investors, Macy’s CFO Karen Hoguet said 2015 is to be “a transition year” for Macy’s. Last month the retailer announced it would open off-price stores to compete with TJ Maxx, Ross, Nordstrom Rack and others. Macy's also announced plans to expand its successful test market of same-day delivery.
“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,” Lundgren added. “We are very excited about our upcoming acquisition of Bluemercury, Inc., widely recognized as America’s largest and fastest-growing luxury beauty products and spa retailer. We continue to expect to complete the Bluemercury transaction in the first quarter, with an initial focus on accelerating the growth of its base of self-standing specialty stores in urban and suburban markets, as well as on accelerated omnichannel growth and offering Bluemercury products in Macy’s stores. This represents a new channel and access to new customers for our company.”
The company forecast earnings of $4.70-$4.80 a share for the year ending January 2016, lower than analysts' average estimate of $4.84, according to Thomson Reuters. It expects same-store sales growth to accelerate to about 2 percent this year from the 0.7 percent rise last year. But total sales are expected to grow about 1 percent to $28.39 billion, short of the average analysts' estimate of $28.63 billion. Macy’s operates more than 850 stores in 45 states.