Macy’s Department Store Investors will wait and see how CEO Tony Spring is able to bring another quarter of mixed results along with the turnaround speed of the business. Another activist investor Hope to privatize the chain store.
Throughout the business, including Macy’s flag, Bloomingdale and Blue Mercury, comparable sales fell 1.1% in the most important holiday quarter. However, its own and licensing business and comparable sales in its online marketplace increased by 0.2%, the highest sales since the first quarter of 2022.
Additionally, the so-called “top 50” locations – Macy’s stores put more resources as part of its turnaround plan – saw comparable sales rise 0.8%, a metric that was positive for the fourth consecutive quarter.
In an otherwise worse result, two highlights suggest that Macy’s turnaround shows some signs of life – which may need to be a little longer than expected.
Macy’s expects adjusted earnings per share of $2.05 and $2.25, with sales between $21 billion and $21.4 billion, lower than Wall Street’s expectations of $2.31 and $21.8 billion per share, according to LSEG.
According to an LSEG survey of analysts, the department store performed in its fourth quarter compared to Wall Street expectations:
- Earnings per share: $1.80 adjusted with expected $1.53
- income: $7.77 billion vs. $7.87 billion
The company reported net income ending in three months was $342 million, or $1.21 per share, compared with a loss of $128 million, or 47 cents a share a year ago. Excluding one-time items, including damages, settlements and restructuring costs, Macy’s reported $507 million in revenue or $1.80 per share.
Sales fell to $7.77 billion, down about 4% from $8.12 billion a year ago. Like other retailers, Macy has benefited from the additional sales week a year ago, which is biased towards comparison.
Macy’s mixed results were to serve as CEO of traditional department stores for more than a year. Although Bloomingdale’s and Blue Mercury’s sales rose 4.8% and 6.2% respectively, Macy’s eponymous banner remains the company’s laggard, with Comps down 1.9%.
To address long-standing problems on traditional banners, Spring implements a radical store closure plan Including 150 stores closed and strategies to fix their position where they perform better. Macy’s and other department stores have shrunk over the years, and it has faced criticism for neglecting its stores, has not had enough staff and has not lagged behind winning the necessary retail necessities in any environment.
Spring has begun to solve these problems by investing in 50 locations and providing better staffing, merchandise sales and visual introduction to the company’s wide range of products. So far, the plan seems to be working. These locations perform better than most chain stores, and the company plans to expand its strategy beyond these 50 stores.
Still, Macy’s will leave about 350 locations of the same name after the end of the store, which will take time and capital to expand its strategy to most of the chain. Whether investors will have the patience to see Macy’s strategy play its role.
In December, activist investor Barington Capital revealed it had a stance at Macy’s and hoped the company would cut spending, explore selling its luxury brands and take a closer look at its real estate portfolio. This is the fourth activist in department stores in the past decade.
Like Arkhouse and Brigade, many suspect Barington was primarily behind Macy’s profitable real estate portfolio and was more interested in making a profit than doing the jobs necessary to revitalize the chain. Still, Macy’s must act in the interests of shareholders, and if it is not done quickly enough to return to value quickly, activists may eventually win.
Macy announced Thursday that it intends to resume stock buybacks under its remaining $1.4 billion in stock buyback authorization “market conditions pending.”
“Based on our motivation, we continue to enhance the customer experience, provide excellent operations and make prudent capital investments,” Adrian Mitchell, Chief Operating Officer and Chief Financial Officer of Macy’s, said in a statement. “We remain committed to generating healthy free cash flow through stock buybacks and predictable quarterly dividends and returning capital to shareholders.”
