As it reported fourth-quarter financial results that exceeded Wall Street expectations, Macy’s is launching a new strategy dubbed “A Bold New Chapter” to improve financial and operational performance, including 150 planned store closings over three years.
A Yahoo Finance-published analyst consensus estimate called for adjusted diluted earnings per share of $1.96 and revenues of $8.15 billion.
Macy’s comps slid 6% on an owned and 4.7% on an owned plus licensed basis. Bloomingdale’s comps slipped 1.5% on an owned and 1.6% on an owned plus licensed basis. Bluemercury comps gained 2.3%.
Net sales were $8.12 billion, while total revenue was $8.38 billion versus $8.26 billion and $8.58 billion, respectively, in the year-earlier quarter. Operating loss was $72 million versus operating income of $676 million in the year-prior period.
For the full year, net income was $105 million, or 38 cents per diluted share, versus $1.18 billion, or $4.19 per diluted share, in the year before, the company maintained. Adjusted net income was $973 million, or $3.50 per diluted share, versus $1.26 billion, or $4.48 per diluted share, in the year previous.
Net sales were $23.09 billion, while total revenue was $23.87 billion versus $24.44 billion and $25.45 billion, respectively, in the year earlier. Operating income was $382 million versus $1.73 billion in the year previous.
In his first conference call as Macy’s CEO, Tony Spring identified the company’s Bold New Chapter strategy as “designed to accelerate financial improvement and deliver sustainable, profitable growth.”
Macy’s plan to close 150 stores includes 25% of the company’s gross square footage but will eliminate operations that only generate 10% of sales today. The company expects to close 50 of those stores by the end of the current fiscal year. Funds that would go to support the closing stores will shift to investments in the remaining 350 stores. Macy’s expects to monetize the store closings effectively and will remain somewhat flexible in their disposition to maximize their value. The company will continue working toward opening 30 small format stores by the end of fiscal 2025. The company also plans to build its Bloomingdale’s and Bluemercury store portfolios by a combined 20%.
As a main part of the Bold New Chapter strategy, Macy’s will work to strengthen its eponymous nameplate, accelerate growth in luxury merchandise and simplify and modernize operations throughout the business. The initiative will also include enhancing omnichannel operations to bring stores and e-commerce into a better alignment and, thus, boost customer satisfaction. With the strategy, Macy’s expects to generate low single-digit comparable sales gains and reach pre-pandemic levels of annual free cash flow in 2025. The new strategy announcement comes even as Macy’s finds itself in a proxy fight with two investment firms that will be settled at its annual meeting.
As for fiscal 2023, Spring said that, in the holidays, Macy’s benefited from ongoing efforts to improve omnichannel, merchandising and value performance. He added that the Macy’s customer proved more resilient than anticipated despite a shift in emphasis across the larger market away from discretionary purchasing.
In announcing the financial results, Springs said, “I am grateful to all our teams for their continued commitment to our customers during the holiday season. Throughout the fourth quarter, we delivered an improved omnichannel experience, with effective merchandising and a clear demonstration of value that resulted in a strong close to the year. Our portfolio of iconic and globally recognized nameplates, healthy balance sheet and fortified operations position us to execute A Bold New Chapter. This strategy is designed to create a more modern Macy’s, Inc. that is expected to generate meaningful value for our shareholders in the years ahead.”
