Macy’s Records Massive Losses, Moves to Reopen More Stores

Macy’s expects to report an operating loss of between $905 million and $1.1 billion for the first quarter.
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Macy’s  (M) - Get Report reported preliminary operating losses in the millions due to the Covid-19 pandemic that shuttered hundreds of its Macy’s and Bloomingdale’s stores in March and April, but the department store operator said it was starting to reopen many of its locations, with more to come over the Memorial Day long weekend.

In a statement, Macy’s said it expects to report an operating loss of between $905 million and $1.1 billion for the first quarter compared to $203 million in operating income during the same period a year ago. Net sales are expected to be between $3 billion and $3.03 billion compared to $5.5 billion in the first three months of 2019.

“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,” CEO Jeff Gennette said. “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.”

Gennette said the retailer experienced “a steady uptick” in its digital business in April, “which was encouraging, but only partially offset the loss of sales from the stores.”

The company will release its full first-quarter results on July 1. Analysts polled by FactSet are currently expecting Macy's to post a loss of 98 cents a share on sales of $3.6 billion.

Meanwhile, the company has been reopening stores across the country, with 190 Macy’s and Bloomingdale’s stores now fully operational and another 80 Macy’s stores expected to open for Memorial Day weekend, Gennette said, adding that customer demand over the past two weeks has been “moderately higher than we anticipated.”

Retailers have been among the hardest hit through the pandemic, not only because they were forced to close their physical doors but also because of the massive economic toll that has already shifted consumers' shopping patterns away from non-essential goods and services like clothing, housewares and electronics.

U.S. retail sales, a measure of purchases at stores, gas stations, restaurants, bars and online, dropped a record 16.4% last month, almost double March's 8.7% decline and the steepest month-on-month drop since 1992.

Several large-scale retailers have already moved to filed for Chapter 11 bankruptcy protection, including J.C. Penney  (JCP) - Get Report, J.Crew and Neiman Marcus.

Shares of Macy’s were up 1.28% at $5.16 in Thursday trading.