People wear face masks as they walk through Herald Square in New York City on January 8, 2021.
Angela Weiss | AFP | Getty Images
Macy’s reported its first quarterly profit in a year on Tuesday as its efforts to reduce inventory levels over the holidays and rely less on deep discounts are paying off.
The company expects 2021 to be a year of recovery and rebuilding as it fights back from the losses it suffered during the pandemic. It offered a prospect of persistent pandemic-related obstacles in the spring, with momentum escalating in the latter half of 2021.
Like many of his colleagues, Macy’s has been injured by shoppers who made fewer trips to the mall and bought fewer clothes when they worked from home and attended fewer special events during the health crisis.
Macy’s shares rose more than 3% in premarket trading.
Here’s how the company performed in the fourth quarter ended January 30th, compared to analyst expectations based on a survey by Refinitiv:
- Earnings per share: 80 cents, adjusted compared to 12 cents, expected
- Revenue: $ 6.78 billion versus $ 6.5 billion expected
Net income fell from $ 340 million, or $ 1.09 per share last year, to $ 160 million, or 50 cents per share. With no one-off costs, the company made 80 cents per share, better than the 12 cents expected by analysts.
Revenue declined from $ 8.34 billion a year ago to $ 6.78 billion. That was better than what analysts had expected to be $ 6.5 billion.
According to Macy’s, sales in the same store based on proprietary and licensed products decreased 17.1% from 2019. Analysts called for a decline of 21.3% according to Refinitive data.
CEO Jeff Gennette noted that the company saw its greatest strength in the quarter in the home, beauty, jewelry, and timepiece sectors, as consumers diverted more of their spending from clothes and fancy shoes to accessories and items to their homes beautify.
Ecommerce sales rose 21% over the last period. The company said digital sales accounted for 44% of net sales, while roughly a quarter of Macy’s digital sales for the quarter came from its stores.
Macy’s predicts that annual online sales will exceed $ 10 billion over the next three years as the department store operator anticipates that customers’ buying habits of buying more online will extend beyond the pandemic.
Macy’s is in the process of trimming its real estate to keep the better-formed stores open in America’s best malls. In 2019, the company announced that it would close 125 locations by 2023. Earlier this year, as part of its three-year shutdown plan, Macy’s released the locations of more than 40 stores, which are slated to close by mid-2021.
Looking ahead to fiscal 2021, Macy’s claims sales between $ 19.75 and $ 20.75 billion. Analysts had asked for annual sales of 20.13 billion US dollars.
The adjusted earnings per share are expected to be between 40 and 90 cents. Analysts had forecast adjusted earnings of 77 cents per share.
Read the full Macy’s press release and materials here.