Macy’s Reports First Quarter Results and Updated Guidance

May 21, 2024  by HFBusiness Staff in Business Strategy, Industry   

“We are encouraged by our customers’ response to our Bold New Chapter strategy resulting in sales near the high end of our outlook. Our teams executed with discipline and efficiency, which contributed to first quarter earnings that exceeded our expectations,” said Tony Spring, chairman and chief executive officer of Macy’s, Inc.

“At the Macy’s nameplate, go-forward business performance was led by our First 50 locations, which achieved comparable sales growth year over year and are a leading indicator for our go-forward fleet. 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.”

First Quarter Highlights

 

Diluted earnings per share of $0.22 and Adjusted diluted earnings per share of $0.27.

Compares to diluted earnings per share of $0.56 and Adjusted diluted earnings per share of $0.56 in the first quarter of 2023.

Net sales of $4.8 billion, down 2.7% versus the first quarter of 2023.

Comparable sales down 1.2% on an owned basis and down 0.3% on an owned-plus-licensed-plus-marketplace basis.

            Macy’s, Inc. go-forward business comparable sales, inclusive of go-forward locations and digital, down 0.9% on an owned basis and up 0.1% on an owned-plus-licensed-plus-marketplace basis.

Company's nameplate highlights include:

Macy’s comparable sales down 1.6% on an owned basis and down 0.4% on an owned-plus licensed-plus-marketplace basis.

            Macy’s go-forward business comparable sales, inclusive of Macy’s go-forward locations and

            digital, down 1.3% on an owned basis and flat on an owned-plus-licensed-plus-marketplace   basis.

• Go-forward locations comparable sales up 0.1% on both an owned and owned-plus-licensed basis.
• First 50 locations comparable sales, included within go-forward locations comparable sales, up 3.3% on an owned basis and up 3.4% on an owned-plus-licensed basis.
• Non-First 50 go-forward locations comparable sales, included within go-forward locations comparable sales, down 1.2% on an owned basis and down 1.3% on an owned-plus-licensed basis.

Macy’s non-go-forward locations comparable sales down 4.5% on both an owned and owned-plus-licensed basis.

Bloomingdale’s comparable sales up 0.8% on an owned basis and up 0.3% on an owned-plus-licensed-plus-marketplace basis.

Bluemercury comparable sales were up 4.3% on an owned basis.

Other revenue of $154 million, a $37 million decrease.

            Represented 3.2% of net sales, a decline of 60 basis points from the first quarter of 2023.

            Credit card revenues, net declined by $45 million to $117 million. The decline was     attributable to the impact of expected higher delinquency rates and net credit losses within          the portfolio.

            Macy’s Media Network revenue, net rose $8 million to $37 million from increased vendor     engagement.

Merchandise inventories were up 1.7% versus first quarter of 2023.

Entering the second quarter of 2024, end-of-quarter inventories are well-positioned for the upcoming summer season.

Gross margin rate for the quarter was 39.2%, down from 40.0% in the first quarter of 2023.

• Merchandise margin declined 100 basis points, primarily reflecting additional discounting for slower-moving warm weather products.
• Delivery expense as a percent of net sales improved 20 basis points from the prior year reflecting ongoing efforts to improve supply chain efficiency.
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Selling, general and administrative (“SG&A”) expense of $1.9 billion, a $39 million decrease.

            SG&A expense as a percent of total revenue was 38.2%, 50 basis points higher than the first             quarter of 2023, reflecting the year-over-year decline in net sales and credit card revenue.

• SG&A expense dollars benefited from the company’s commitment to ongoing expense discipline.

2024 Guidance

The company updated its annual sales and earnings outlook to reflect a portion of first quarter performance along with the dynamic macro environment. The company continues to view 2024 as a transition and investment year, reflecting investments in key customer-focused strategic initiatives, supported by the company’s strong balance sheet. The updated outlook assumes customers will continue to be discerning in their discretionary purchases and provides flexibility to respond to the competitive landscape and promotional environment.

The full updated outlook for 2024, presented on a 52-week basis, can be found in the presentation posted to macysinc.com/investors.

Adjusted diluted EPS excludes any potential impact from the credit card late fee ruling, which was stayed on May 10, 2024. Additionally, the impact of any potential future share repurchases associated with the company’s current share repurchase authorization is also excluded.

The company does not provide reconciliations of the forward-looking non-GAAP measures of comparable owned-plus-licensed-plus-marketplace sales change and adjusted diluted earnings per share to the most directly comparable forward-looking GAAP measures because the timing and amount of excluded items are unreasonably difficult to fully and accurately estimate.

For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results. See Important Information Regarding Financial Measures.

Conference Call and Webcasts
A replay of the conference call is available on the company’s website or by calling 1-877-660-6853, using passcode 13745966. Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/newsroom.