Despite Q4 Drop, Macy’s Stays Optimistic and Sees Heady Digital Gains

To further grow e-commerce this year, a website devoted to Bloomingdale’s off-price outlets is in the early stages of development, and macys.com is undergoing a major overhaul.

“You will start to see the website in its new skin in the fourth quarter,” Gennette said in an interview Tuesday morning, just after the retailer reported sharp declines in fourth-quarter sales and profits but indicated its overall performance beat expectations at all three brands — Macy’s, Bloomingdale’s and Bluemercury — and continued to show improvement from quarter to quarter last year marked by a return to profitability.

The pandemic did take a steep toll on Macy’s Inc. in the fourth quarter. Net income fell to $160 million, or 51 cents per diluted share, from $340 million, or $1.09, in the year-ago period, as comparable sales declined 17.1 percent.

Adjusted earnings before interest, taxes, depreciation and amortization came to $789 million, versus $1.16 billion in the year-ago period. Operating income totaled $401 million last quarter, versus $559 million in the year-ago period.

Digital was a fourth-quarter highlight, as e-commerce grew 21 percent in the period ended Jan. 30, and represented 44 percent, or nearly $3 billion, of Macy’s total sales of $6.78 billion. About 25 percent of Macy’s digital sales were fulfilled from stores, including ship from store; buy online, pick up in store; curbside pickup, and same-day delivery.

“Performance was driven by the home, beauty, jewelry and watch categories, growth in digital sales and by acquiring new customers,” Gennette said. “Our investments in digital innovation continued to pay off in the quarter, with digital sales up 21 percent from 2019. We anticipate annual digital sales to reach $10 billion within the next three years, and that digital will become an even more profitable contributor to our business. Additionally, we exited the quarter with a lower cost base and a strong liquidity position, supported by a $3 billion asset-based lending facility that we have not drawn upon.”

For 2021, digital sales are projected to ease to 35 percent of net sales, as COVID-19 vaccinations accelerate and people feel safer returning to stores. Macy’s executives view 2021 as a year of “recovery and rebuilding” with continued pandemic-related challenges in the spring season and momentum building in the back half.

“We have made progress on the Polaris transformation strategy we introduced a year ago,” Gennette added. “We are accelerating several elements, including our focus on digital and omnichannel sales, improving customer value and building the infrastructure to support the growth of our business. We believe these actions will propel us to stronger performance in 2021 and beyond.”

Gennette characterized 2020 as “a year of unprecedented disruption,” adding, “We are incredibly proud of our team for their hard work to make our customers feel safe and comfortable when shopping with us. And we are grateful to our brand partners for navigating through the pandemic with us.”

Macy’s CEO Jeff Gennette Thomas Iannaccone/WWD

For all of last year, Macy’s lost $3.94 billion, compared to a profit of $564 million in 2019. The company reported $3.58 billion in restructuring, impairment, stores closings and other costs. Sales totaled $17.34 billion in 2020, versus $24.56 billion in 2019.

For 2021, Macy’s anticipates between $19.75 billion and $20.75 billion in sales, adjusted diluted earnings per share of between 40 cents and 90 cents and asset sale gains between $60 million and $90 million.

Source: Read Full Article