Macy’s Dismal 1Q15 Sales: Shipment Delays and Bad Weather
Macy’s Starts the Year on a Disappointing Note
Macy’s sales disappoint
On May 13, Macy’s (M) announced its results for 1Q15—ending May 2, 2015. The company’s net sales for 1Q15 declined by 0.7% to $6.2 billion from the same quarter last year.
Macy’s sales are below expectations for sixth straight quarter
Macy’s 1Q15 sales missed analysts’ sales estimates of $6.3 billion. This marks the sixth consecutive quarter that the company’s sales fell below expectations. Macy’s 1Q15 sales were impacted by shipment delays caused by the West Coast port dispute as well as the harsh winter. The favorable impact of the March 2015 acquisition of Bluemercury—a luxury beauty products and spa services retailer—was offset by store closures.
Lower purchases by tourists
Macy’s also pointed out that sales from international tourists, which account for ~5% of the annual sales, declined in the first quarter. Sales from international tourists at flagship Macy’s and Bloomingdale’s stores in key markets like Manhattan, Las Vegas, San Francisco, and Chicago declined by double-digits in the quarter. International tourists’ decline in spending was caused by the strengthening of the dollar against the major currencies.
Macy’s accounts for ~1% and 0.1% of the SPDR S&P Retail ETF (XRT) and the iShares Core S&P 500 ETF (IVV).
Department stores struggle
Department stores like Macy’s, Kohl’s (KSS), and Sears (SHLD) have been seeing sluggish demand over the past few years. Consumers are still cautious about buying discretionary (XLY) products—despite improving macro conditions. Department stores have also been impacted by the surge in online sales and consumers’ penchant for bargain hunting at off-price retailers like TJX Companies (TJX) and Ross Stores (ROST).
Lower revenue also impacted the company’s earnings. We’ll discuss this in the next part of this series.
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