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Macy’s Holiday Comps Gain But Guidance Slips

For the November/December holiday season, Macy’s company-owned store comparable sales advanced 0.7% while owned plus licensed store comps gained 1.1%.

At the same time, the company revised its financial guidance for 2019, with comps now expected to advance 2% rather than 2.3% to 2.5% and earnings per diluted share, with certain one-time charges excluded, expected to come in at $3.95 to $4 rather than $4.10 to $4.30.

Jeff Gennette, Macy’s chairman and CEO, said, “We delivered our second consecutive year of positive holiday comparable sales, driven largely by the traction of our strategic initiatives: Backstage, Vendor Direct, Store Pickup, Loyalty and Growth50. We experienced another period of double-digit growth in our digital business and continued strength in the Growth50 stores. The holiday season began strong, particularly during Black Friday and the following Cyber Week, but weakened in the mid-December period and did not return to expected patterns until the week of Christmas. In the holiday period, we saw strong performance across a number of categories: fine jewelry, women’s shoes, fragrance, dresses, outerwear, active and home. This sales growth was largely offset by underperformance of other categories— specifically women’s sportswear, seasonal sleepwear, fashion jewelry, fashion watches and cosmetics— temporary fulfillment challenges following the fire in our West Virginia distribution center and underestimation of the impact of changes to our pre-Christmas earn and redeem promotional event.”

Gennette pointed out that Macy’s, in the holiday aftermath, had revised the guidance it announced in November while also taking “the necessary steps in January to ensure a clean inventory position as we enter fiscal 2019. Looking back at 2018, we met our goal of returning the company to growth. Our revised guidance is above the expectations we set at the start of the fiscal year, and we expect to deliver our fifth consecutive quarter of positive comparable sales, including ‘comping the comp’ of the 2017 holiday season. The North Star Strategy is gaining traction, and the entire organization is engaged and motivated to continue improving our performance in 2019.”