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Macy's forecasts a loss of $1.1B as some stores to reopen for Memorial Day Weekend

As Memorial Day Weekend approaches, Macy's plans to reopen stores in select locations. Yahoo Finance's Alexis Christoforous, Brian Sozzi and Ines Ferre discuss that and the retailer's first-quarter preliminary results.

Video Transcript

BRIAN SOZZI: Welcome back to "The First Trade." Let's take a look at one of the companies we're watching on yahoofinance.com. That is Macy's. The company released its preliminary first-quarter results this morning and held a conference call with CEO Jeff Gennette with JPMorgan this morning. And we find our Ines Ferre who was on that call. Ines, what did you learn?

INES FERRE: Yeah, Brian, well, Jeff Gennette basically laid out the numbers that they're expecting these preliminary sales numbers for the first quarter with net sales coming in at approximately $3 billion and an operating loss of anywhere between $1.1 billion and $905 million, and those ranges excludes store-impairment charges.

Now all of Macy's stores have been closed or were temporarily closed on March 18. They have begun reopening starting on May 4.

And what I found interesting was some of the commentary that was on that call from CEO Jeff Gennette talking about digital business, how it will become increasingly important. It's expected to pick up more quickly. Now, the company did see an uptick in digital sales in April. They've been offering curbside pickup. But he also said the recovery will be gradual and for a period of time we will be a smaller company.

And also what I found interesting was the color from CFO Paula Price. She said that the company had to take a significant inventory write-down, some $300 million, which hurt gross margins. Also, they saw a slowdown in credit revenue. The best channel for them to acquire new accounts, of course, is inside their stores. And since their stores were temporarily closed, that hurt that. Also, delinquencies accelerated because of the unemployment situation. She also said that it will take some time to reach a stabilized level of sales well into 2021 and she said perhaps into 2022, Brian.

Right now, the stock is up more than 4%, but if you just take a look at a year-to-date chart, that's down 68%, Brian.

BRIAN SOZZI: All right, Ines Ferre, thank so much.

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