As it adapts to the coronavirus-impacted retail environment, Macy’s has provided preliminary sales and operating results estimates for the 2020 first quarter, which include significantly reduced sales, but also some good news from reopened stores.
Macy’s estimated that net sales for the first quarter should come in between $3 billion and $3.03 billion versus $5.5 billion in the year-earlier quarter, with an operating loss between $1.11 billion and $905 million compared to operating income of $203 million in the period a year prior.
“This is a challenging time for the country, for retail and for Macy’s,” said Jeff Gennette, chairman and CEO, Macy’s. “COVID-19 has impacted the lives of many of our colleagues and customers, and health and safety remain our top priority. We closed all of our stores— Macy’s, Bloomingdale’s and Bluemercury— on March 18, which had a significant impact on our first quarter results. Looking back, our performance in February was solid and in line with our expectations, but we saw a precipitous decline in sales with the stores closure in March. As a developed omnichannel retailer, we experienced a steady uptick in our digital business in April, which was encouraging, but only partially offset the loss of sales from the stores. The digital performance was driven by strong execution and enhanced fulfillment options, including curbside pickup where allowed.”
On May 4, Gennette noted, Macy’s began to reopen stores that had closed as mandated movement and retail restrictions kicked in. By the week of May 17, Macy’s had fully reopened about 190 namesake and Bloomingdale’s stores.
“We expect another 80 Macy’s stores to open for Memorial Day weekend,” he said. “We have enhanced health and safety standards across all of our stores and facilities. We are also offering curbside pickup in many of our locations, including some stores that remain closed to the public. With two weeks of results from reopened stores, customer demand is moderately higher than we anticipated. Customers also responded positively to our Mother’s Day gifting strategy. Even in times of social distancing, our customers want to celebrate the special occasions in their lives, and we help them do that safely. We are closely watching consumer behavior as we reopen more stores, and we remain flexible as we navigate this crisis. We expect business to recover gradually. I want to thank our teams who are resetting plans daily, innovating quickly and executing well.”
On the financing front, Gennette added, “We notified our banking partners early on of our plans to access additional financing, and this process is on track. We are confident we will obtain this financing before it is needed, allowing us to improve our financial flexibility. We are taking the right steps to ensure that Macy’s will emerge on the other side of this crisis a strong, resilient company and ready to serve our customers.”