Macy’s Needed Some Good News And Got It
After being clobbered by the coronavirus for most of last year, Macy’s needed some good news. The New York City-based department store chain received that good news via its fourth-quarter earnings, which the retailer announced Feb. 23.
Revenue for the fourth quarter ending Jan. 30 was $6.78 billion, beating analysts’ expectations of $6.5 billion. That was down from $8.34 billion in the 2019 fourth quarter but a step in the right direction.
While comparable sales were down 17.0% for the quarter — a reflection of the continued challenges posed by the pandemic, Macy’s said — the performance beat the company’s expectations, which the retailer said was driven by successful execution of the company’s holiday strategy, from off-price to luxury.
Another bright spot: Macy’s said digital sales grew 21% in the 2020 fourth quarter when compared to 2019’s fourth quarter. Digital sales accounted for 44% of net sales.
“Macy’s fourth-quarter results exceeded our expectations across all three of our brands (Macy’s, Bloomingdale’s and Bluemercury), as we showed continued quarter-to-quarter sales performance improvements and returned to profitability,” said Jeff Gennette, chairman and CEO. “Performance was driven by the home, beauty, jewelry and watch categories, growth in digital sales and by acquiring new customers.”
Gennette said the company’s investments in digital innovation continued to pay off in the quarter.
“We anticipate annual digital sales to reach $10 billion within the next three years, and that digital will become an even more profitable contributor to our business,” he added. “Additionally, we exited the quarter with a lower cost base and a strong liquidity position, supported by a $3 billion asset-based lending facility that we have not drawn upon.”
How far has Macy’s come since the beginning of 2020?
The difference between Macy’s first-quarter sales in 2020 and 2019 was $2.48 billion. That’s $2.48 in the hole — a 45% dip in sales. Macy’s reported $3.017 billion in sales for first quarter of 2020 compared to $5.504 billion in sales in the same quarter for 2019.
Despite the sobering numbers, Gennette remained upbeat at the time, and said the department store was doing what it needed to do to turn things around.
Macy’s operates about 800 stores but plans to close more stores in the first half of the year as part of its three-year plan to close about 125 locations, which was announced last February before the pandemic.