New York— Following a third-quarter fall in consolidated sales and profitability, executives at Macy’s Inc. pointed to positive developments.
The company’s luxury retail banners, Bloomingdale’s and Bluemercury, performed well, while its Macy’s First 50 sites witnessed steady sales growth. According to Tony Spring, the chairman and CEO of the company, comparable sales for the whole portfolio have been trending higher than third-quarter levels thus far.
“The positive momentum we are building through our Bold New Chapter strategy is reflected in our third quarter results,” he continued.
The following are the five main conclusions from the Q3 review call with investors this morning:
1. Although still poor, home sales at Macy’s stores improved sequentially in the third quarter over the second. Home was soft “in certain areas” at Bloomingdale’s, according to Spring. He didn’t go into detail.
2. Mattresses are outperforming furniture in Macy’s stores’ high-end home categories. Despite hiring a new high-profile team, Spring forecast that before sales significantly increase, interest rates will need to continue to decline. “When we enter the latter part of 2025, we believe there may be opportunities for us,” he stated.
3. Next year, Macy’s private label makeover will finally make its way to the home department. In spring 2023, the firm started evaluating all 24 of its retail brands, and thus far, it has either updated existing clothing labels or launched new ones.
4. The firm announced today that it will close 65 Macy’s stores this year, out of the 150 it intends to close by the beginning of 2027. “Only a handful of those doors are in a single-store market,” said Adrian Mitchell, COO/CFO.
5. According to Mitchell, a greater percentage of sales in clearance shows that Macy’s stores’ clientele is still “choiceful” and value-oriented. The business anticipates that pressure on those customers will continue into 2025.
Q3: Declining Consolidated Sales and Profits
Consolidated net sales for Macy’s Inc. fell 2.4% to $4.7 billion for the quarter that ended on November 2. Comparable sales decreased 1.3% on an owned-plus-licensed-plus-marketplace basis and 2.4% on an owned basis.
Weakness in Macy’s non-First 50 locations, digital channel, and cold weather categories largely offset sales increases at Bloomingdale’s, Bluemercury, and Macy’s First 50 locations.
With comparable sales up 1.0% on an owned basis and up 3.2% on an owned-plus-licensed-plus-marketplace basis, Bloomingdale’s net sales increased by 1.4%. Digital, attractiveness, and modern clothing were important motivators.
For the fifteenth straight quarter, comparable sales increased, with bluemercury net sales up 3.2% and comparable sales up 3.3% on an owned basis.
The gross margin dropped to 39.6%, a 60 basis point drop. The product mix and the switch to cost accounting caused the merchandise margin to drop by 70 basis points. Efficiency improvements in the company’s fulfillment network and a decrease in shipping sales volume helped to partially offset the merchandise margin loss.
At $28 million, net income dropped by over 32%.
Macy’s Revises Full-Year Forecast
Today, Macy’s Inc. reduced its bottom-line prediction for the whole fiscal year and increased its top-line guidance. The business now anticipates:
- Compared to its previous projection of $22.1 billion to $22.4 billion, the consolidated fiscal year sales came to $22.3 billion to $22.5 billion.
- Compared to earlier forecast of down 2.0% to down 0.5%, consolidated comparable owned-plus-licensed-plus-marketplace sales are expected to drop between 1.0% and flat.
- partly as a result of the intentional accounting error it found in November, adjusted EPS of $2.25 to $2.50 compared to the previous forecast of $2.34 to $2.69. The business declared today that the investigation, which included a single former employee, was closed.