Macy’s has logged fourth-quarter earnings that outpaced analysts’ bets, signaling hopes for the struggling retailer amid its ambitious turnaround efforts.
The department store chain announced on Tuesday earnings per share of $2.12 on an adjusted basis, versus Wall Street’s expectations of $1.96 per share. Although revenues dropped 1.46% to $8.34, the figure topped forecasts of $8.32 billion.
Macy’s attributed the earnings beat to a solid holiday shopping season. For the three months ended Feb. 1, same-store sales dropped 0.8% on an owned basis and fell 0.7% on an owned-plus-licensed basis. (Investors appeared bullish on signs of improvement at Macy’s when it released preliminary holiday sales results on Jan. 8.)
In a statement, chairman and CEO Jeff Gennette acknowledged the retailer’s missteps.
“Taken as a whole, 2019 did not play out as we intended for Macy’s,” he said. “However, we executed well during the holiday 2019 season. We were pleased with the significant trend improvement in the fourth quarter, including a meaningful sales uptick in the 10 shopping days before Christmas… Importantly, we exited the year with a clean inventory position.”
Three weeks ago during its investor day, Macy’s announced a three-year turnaround plan that includes shuttering 125 outposts, cutting 2,000 jobs (or about 9% of its corporate workforce) and ramping up investment in both higher-margin private labels and off-price through Macy’s Backstage. The retailer will also close its Cincinnati headquarters and San Francisco tech office, relocating some of these jobs to New York City, it’s new home base.
“We have a clear perspective of where Macy’s Inc. and our brands — Macy’s, Bloomingdale’s, and Bluemercury — fit into American retail today,” Gennette added. “We know 2020 will be a transition year as we make significant structural changes to the business.”
For the full year, Macy’s reiterated its outlook, predicting adjusted earnings of between $2.45 and $2.50 per share and sales in the range of $23.6 billion to $23.9 billion.
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