Macy’s Reports Another Drop in Sales but Sees ‘Traction’ in Turnaround
The Numbers: Macy’s lags while Bloomingdale’s and Bluemercury grow.
Macy’s said its comparable-store sales in the United States fell 1.2 percent from the same quarter a year earlier. The retailer has not reported a sales increase since the first quarter of 2022. It reported a first-quarter profit of $62 million, less than half of what it made in the same quarter last year.
Sales at the namesake Macy’s brand were the weakest of all of the company’s brands, falling 1.6 percent. Sales at Bloomingdale’s rose 0.8 percent, and Bluemercury’s sales rose 4.3 percent.
Macy’s slightly raised the low end of its sales forecast to $22.3 billion for the year, from the $22.2 billion it had expected in February. It also bumped up its profit forecast a bit.
The company’s stock rose in premarket trading, and is roughly flat this year.
What They’re Saying: Shoppers are feeling squeezed.
Tony Spring, Macy’s chief executive, and Adrian Mitchell, the chief financial officer, said several times on a call with analysts that they expected consumers to remain under pressure for the rest of the year.
“Inflationary pressures persist, and they’re feeling that pinch,” Mr. Spring said.
David Swartz, a senior equity analyst at Morningstar, saw worrying signs about consumer spending in the details of Macy’s earnings. Credit card revenues were lower in the first quarter versus last year, which the company attributed to higher delinquency rates.
“It suggests their customers are buying things with Macy’s credit cards that they can’t actually afford because they’re not paying their credit card bills on time or maybe not even at all,” Mr. Swartz said. “That doesn’t give you a lot of confidence that their customers are in very good financial shape at the moment.”
According to the Census Bureau, retail sales not adjusted for inflation rose by just over 3 percent in the first four months of the year, compared with the previous year. But sales at department stores fell 2.4 percent over that period.
What Happens Next: Looking for signs that an overhaul is paying off.
Macy’s is undergoing a major overhaul, which includes closing 150 stores over the next three years. After the downsizing, Macy’s expects to have 350 stores, just over half the number it had before the pandemic.
Macy’s has started to make a distinction between the stores it plans to keep and the ones it is closing. In the first quarter, it said that 50 stores that represent the company’s future, based on geography, staffing and other factors, saw a comparable sales increase of 3.3 percent.
In a statement on Tuesday, Mr. Spring said the performance at those stores was a “leading indicator” for what the remaining fleet would look like after the store closures.
“Although early days, our investments in product, presentation and experience are gaining traction and reinforce our belief that longer-term Macy’s Inc. can return to sustainable, profitable growth,” he said.
Mr. Spring has also faced pressure from an activist investor group that believes the company is not doing enough to turn its business around. In December, the group offered to acquire Macy’s and take it private, which the retailer rebuffed. In March, the group raised its bid and valued the company at $6.6 billion, a premium to the company’s current market value.
