Macy’s surpassed expectations in the second quarter even as sales and earnings declined and it turned its attention to holiday gift opportunities.
In addition to the financial results, Macy’s has announced the locations of four new small-format locations scheduled to open in fall 2023, which marks the first expansion of its compact concept stores into the Northeast and Western regions of the United States, with openings in Boston, Las Vegas and San Diego, along with one in Highland, IN.
Net loss was $22 million, or eight cents per diluted share, versus net income of $275 million, or 99 cents per diluted share, in the year-before quarter.
Adjusted for one-time events, net income was $71 million, or 26 cents per diluted share, versus $277 million, or $1 per diluted share, in the year-previous period.
Analysts polled by Yahoo Finance expected adjusted diluted earnings per share of 13 cents on revenues of $5.09 billion.
Macy’s posted net sales of $5.13 billion versus $5.6 billion in the year-earlier quarter with additional revenues of $150 million versus $234 million, respectively, the company stated. Brick-and-mortar sales declined 8% in the period year over year while digital sales declined 10%.
Macy’s comparable sales slid 9.2% on an owned basis and 8.2% on an owned-plus-licensed basis in the quarter year over year, the company reported. Star Rewards program members made up 72% of Macy’s brand comparable owned-plus-licensed sales on a trailing 12-month basis, up approximately three percentage points versus the prior 12-month period. Macy’s stores saw strength in beauty, particularly fragrances and prestige cosmetics, women’s career sportswear, men’s tailored and off-price with Backstage, while active, casual and sleepwear remained challenged.
Bloomingdale’s comps on an owned basis slipped 2.7% and on an owned-plus-licensed basis slipped 2.6% versus the year-past quarter. The banner saw strength in beauty, women’s contemporary and designer apparel, shoes and outlet locations, while handbags, men’s and dresses were soft. Meanwhile, Bluemercury comps were up 5.8% on an owned basis versus the 2022 period with strength in skincare and color cosmetic categories during the quarter.
Overall, Macy’s comps decreased 8.2% on an owned and 7.3% on an owned-plus-licensed basis.
In a conference call, Jeff Gennette, Macy’s chairman and CEO, said, sales were better than expected in the quarter as well as margin and SG&A. Despite lower-than-expected demand for spring merchandise in the first quarter, Macy’s started the third quarter with inventories down. Promotional sell-throughs were better than expected and markdowns were not as deep as anticipated. Store floors and online merchandising include fresh content and seasonally appropriate merchandise with less clutter, he said, adding that soft home improved at Macy’s banner stores including textiles and housewares. The off-price Backstage operations outperformed Macy’s full-line stores, and Bloomingdale’s off-price store results also were better than those at its older sibling The company will “amplify” its position as a gift destination for holiday, Gennette said.
In announcing the financial results, Gennette “In the second quarter, we delivered better-than-expected top and bottom-line results. Our teams surgically implemented clearance markdowns and promotions to effectively clear spring seasonal receipts and ensure fresh assortments for the fall and holiday seasons. We continue to see uncertainty in the macroeconomic environment. We are leveraging our robust data science tools to refine inventory composition while reading and reacting to shifting consumer preferences to meet demand. Looking ahead, we are committed to fortifying our core business and improving our customer experience while investing in our five growth vectors. We believe these advancements, enabled by our strong talent, will drive our relevancy and long-term success as a modern department store.”
Macy’s has defined its five growth vectors as private brand reimagination, digital marketplace, luxury, personalized offers and presentation, and small-format off-mall locations.
In regards to small-format stores, Macy’s pointed out that the Indiana location will become the third in the Midwest. The eight previous locations will continue to operate behind the nameplate Market by Macy’s, whereas the upcoming small-format stores will bear just the iconic Macy’s brand, the company pointed out. Macy’s designed its small format stores, at 30,000 to 50,000 square feet, to deliver a seamless experience with well-known market brands, Macy’s private brands, convenient services, local events and representations of the latest trends in an easy-to-shop environment.
