Macy’s said Tuesday that it turned a profit for the first time in the pandemic, making $160 million during the 13 weeks ending on January 30th, down from $340 million during the same stretch a year ago. Sales at stores open for at least one year dropped 17.1 percent during the period. Net sales dropped to $6.8 billion from $8.3 billion during the same quarter last year.
But Macy’s is looking ahead to a year of recovery and rebuilding from the pandemic as the department store chain offered annual forecasts that beat Wall Street forecasts. Driving that optimism is Macy’s push to accelerate online sales, while focusing on physical stores at top-tier malls and modernizing its supplier network to speed up deliveries.
As a result, Macy’s believes annual sales will reach $20.75 billion this fiscal year, exceeding the roughly $17 billion that Wall Street had been projecting. Macy’s also expects adjusted earnings per share in the range of 40 cents to 90 cents for the year, much better than the $2.92 loss that analysts forecast, according to FactSet.
The company also said on Tuesday it expects digital sales to reach $10 billion within the next three years and that the online side of the business will become even more profitable. Still, the department store defended its physical store business, noting that online sales are two to three times higher in markets with Macy’s stores.
“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 Jeff Gennette, chairman and chief executive officer. “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 percent 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,” continued Gennette. “2020 was a year of unprecedented disruption. We are incredibly proud of our team for their hard work to make our customers feel safe and comfortable when shopping with us. And we are grateful to our brand partners for navigating through the pandemic with us.”