Macy's Inc. (M) - Get Macy's Inc Report posted stronger-than-expected fourth quarter earnings Tuesday and said current year sales could top $20 billion in what the retailer sees as a 'recovery and rebuilding' year.
Shares slipped lower in early trading, however, after the group said mall-based sales will continue to face headwinds linked to consumer spending changes and COVID restrictions, adding that it plans to spend around $650 million as part of its ongoing turnaround plans.
Macy's said adjusted earnings for the three months ending in January, the group's fiscal fourth quarter, came in at 80 cents per share, down 62% from last year but firmly ahead of the Street consensus forecast of a 7 cent bottom line. Group net sales, Macy's said fell 18.7% to $6.78 billion, but again topped analysts' estimates of a $6.5 billion tally.
Same store sales, however, fell 17% from last year, thanks in part to weaker consumer spending over the holiday period and ongoing business and travel restrictions linked to the coronavirus pandemic.
Looking into the 2022 financial year, Macy's said it sees net sales in the region of $19.75 billion to $20.75 billion, with adjusted earnings in the range of 40 cents to 90 cents per share.
“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 CEO Jeff Gennette. “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.”
“We have made 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,” he added.
Macy's shares were marked 0.3% lower in early trading immediately following the earnings release to change hands at $15.25 each, a move that still leaves the stock with an impressive 130% gain over the past six months.
Last week, U.S. retail sales soared past Wall Street forecasts, rising 5.3% from last year to a collective $568.2 billion as consumers snapped-up post holiday deals with government stimulus checks and revived market concerns for faster near-term inflation. December's gain, however, was a disappointing 1% decline from the 2019 total.