Macy’s Turns Q4 Profit Despite Lower Comps

Macy’s suffered lower comparable sales in a coronavirus-stricken market but beat a fourth-quarter Wall Street earnings estimate in posting profits in the quarter while announcing a full-year loss.

For the fiscal year, Macy’s posted a net loss or $3.94 billion, or $12.68 per diluted share, versus net income of $564 million, or $1.81 per diluted share, in the 12 months previous. Net loss adjusted for one-time events was $688 million, or $2.21 per diluted share, versus net income of $906 million, or $2.91 per diluted share, in the year prior.

Net sales were $17.35 billion versus $24.56 billion in the year earlier, Macy’s noted. Operating income loss was $4.48 billion versus net income of $970 million in the year before.

Macy’s posted fourth quarter net income of $160 million, or 50 cents per diluted share, versus $340 million, or $1.09 per diluted share, in the year-previous period. Adjusted net income was $253 million, or 80 cents per diluted share, versus $661 million, or $2.12 per diluted share, in the year-prior quarter.

Macy’s topped a MarketBeat-published analyst consensus adjusted earnings per diluted share estimate of 13 cents.

Net sales in the quarter were $6.78 billion versus $8.34 billion in the year-earlier quarter, Macy’s indicated. Operating income was $401 million versus $559 million in the year-before period.

Fourth-quarter comparable sales at Macy’s slipped 17% on an owned-store basis and 17.1% on an owned-plus-licensed basis, the company reported, reflecting the continued challenges posed by the COVID-19 pandemic. The performance beat the company’s expectations, Macy’s asserted, driven by successful execution of holiday strategy from off-price to luxury. Digital sales grew 21% in the quarter year over year, with digital penetration reaching 44% of net sales. Macy’s filled about a quarter or digital sales from stores via curbside pickup and same-day delivery, it stated.

“Macy’s, Inc.’s fourth quarter results exceeded our expectations across all three of our brands, as we showed continued quarter-to-quarter sales performance improvements and returned to profitability,” said Jeff Gennette, Macy’s chairman and CEO. “Performance was driven by the home, beauty, jewelry and watch categories, growth in digital sales and by acquiring new customers. Our investments in digital innovation continued to pay off in the quarter, with digital sales up 21% 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.”

Gennette added that Macy’s had progress on “the Polaris transformation strategy we introduced a year ago. 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. Twenty-twenty was a year of unprecedented disruption. 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.”