Macy’s said Thursday the idea had a “strong” holiday season thanks to fresher products as well as a renewed focus on customers, nevertheless the retailer’s full-year sales are still likely to decline against a backdrop of weakening foot traffic at malls as well as the growth of internet giants like Amazon.
The department store chain continues to whittle away at its store fleet,. the idea confirmed on Thursday in which 11 locations are set to close early in which year. With such a massive portfolio of stores, Macy’s has been forced to rethink its strategy as well as right-size its real estate, hoping those bets will pay dividends inside the long run.
Macy’s stock fell more than 7 percent Thursday morning on the news.
Macy’s comparable sales on an owned basis rose 1 percent during the months of November as well as December compared with the same period last year. On a licensed as well as owned basis, same-store sales were up 1.1 percent.
Following the better-than-expected results, Macy’s narrowed the range of its prior fiscal 2017 sales guidance as well as raised its full-year earnings outlook. To be sure, the company has yet to return to same-store sales growth.
Macy’s currently expects comparable sales on an owned basis to fall 2.4 percent to 2.7 percent, whereas total revenue will be likely to drop 3.6 to 3.9 percent in fiscal 2017. Previously, Macy’s had forecast total comparable sales to decline by 2.2 to 3.3 percent, while annual revenue was projected to fall by 3.2 to 4.3 percent.
“Macy’s success comes having a few caveats,” GlobalData Retail Managing Director Neil Saunders wrote in a note to clients.
“The first will be in which growth remains relatively weak as well as comes off the back of soft prior year comparatives when comparable sales fell by 2.1%,” Saunders said. “The second will be in which while Macy’s grew, the idea did so by far less than the overall sector; as such the idea will be still losing market share both in total as well as within many key categories.”
Macy’s said the idea expects full-year earnings to benefit via the recent federal tax reform, which will result in an effective annual tax rate in which will be about 1 point lower than the retailer previously estimated.
The company raised its fiscal 2017 earnings outlook to a range of $3.59 as well as $3.69 per share, excluding the impact of various store closings as well as additional costs associated with debt repurchases. Excluding the impact of an anticipated fourth-quarter gain on the sale of a building in San Francisco, adjusted earnings should fall within $3.11 as well as $3.21 per share.
“We saw much better sales trends in our stores as well as continued to see double-digit growth on our digital platforms,” CEO Jeff Gennette said in a statement.
“Our primary focus in 2017 has been to continue the strong growth of digital as well as mobile, stabilize our brick & mortar business as well as set the foundation for future growth,” he added. “Looking ahead to 2018, we are focused on continuous improvement as well as will take the necessary steps to move faster, execute more effectively as well as allocate resources to invest in growth.”
In confirming the 11 locations in which will shutter in which year, Macy’s also said in which path (along with additional efforts) should save the company about $300 million in expenses annually, starting in fiscal 2018, which will be reinvested back inside the business. Macy’s said the idea will begin reducing employees in some locations, while adding in others, as well as will work to “streamline” certain operations completed outside of stores.
“A healthy store base combined with robust digital capabilities will be Macy’s recipe for success,” Gennette said.