Macy’s Reports Strong Holiday Season
Macy’s Inc. (NYSE: M) said it had a “strong” holiday season and reported better-than-expected results for the period. Macy’s comparable sales rose 1 percent during the months of November and December compared with the same period last year. Top-selling items for the period included coats, sweaters, boots, and fragrances.
Macy’s full-year sales are still expected to decline. The retailer now expects comparable sales to fall 2.4 percent to 2.7 percent and for total revenue to drop 3.6 to 3.9 percent for fiscal 2017. Macy’s previously forecast a total comparable sales decline of 2.2 to 3.3 percent and an annual revenue decline of 3.2 to 4.3 percent. The company raised its fiscal 2017 adjusted earnings outlook to a range of $3.59 and $3.69 per share.
Macy’s has confirmed the planned closure of 11 locations early this year. The department store chain is also in a partnership with Brookefield Asset Management to explore opportunities for 50 properties. The department store chain released the locations of more than 60 of the 100 stores it planned to close in 2017 about this time last year. Macy’s recently confirmed that it’s near completing 81 of the 100 planned store closures. It also plans to close 34 more stores “over the next few years.”
Macy’s said the closures and other cost saving measures should save the company about $300 million in expenses annually, starting in fiscal 2018. The company said that those savings will be reinvested back in the business. Macy’s stock fell more than 7 percent after the announcements. The retailer’s shares have tumbled more than 25 percent over the past 12 months. Macy’s is set to announce its fourth-quarter earnings results Feb. 27.
Weakening foot traffic at malls and the growth of internet giants like Amazon have hammered the company’s sales. CEO Jeff Gennette said in a statement, “Looking ahead to 2018, we are focused on continuous improvement and will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth.”
Macy’s has focused on upgrading its loyalty program and mobile app and has been testing smaller versions of its off-price concept, Macy’s Backstage, inside some of its existing stores. The company is also expected to benefit from recent federal tax reform, which will give the company an effective annual tax rate that is about 1 point lower than the retailer previously estimated.