Macy's fiscal first-quarter earnings report surpassed Wall Street's expectations. The department store operator highlighted early signs of momentum in its turnaround strategy. CEO Tony Spring mentioned that the company is in the “early innings” of turning around its namesake stores. By increasing investments in certain Macy's stores, the company has seen a positive response from customers, resulting in more frequent visits and increased purchases. Introducing new brands like Donna Karan and expanding existing ones has also contributed to this improved performance.
In the first quarter, Macy's reported an adjusted earnings per share of 27 cents, exceeding the expected 15 cents. However, the net income for the period fell by 60% to $62 million. The company's revenue of $4.85 billion was in line with expectations. Macy's now anticipates net sales between $22.3 billion and $22.9 billion, representing a decrease from the previous year. Comparable sales are expected to decline between 1% and gain 1.5%.
To boost sales, Macy's has announced the closure of about 150 underperforming Macy's stores, more than a quarter of its namesake locations. Despite this downsizing, the company plans to invest in Bloomingdale's and Bluemercury stores, which have shown better performance. In the first quarter, these brands reported increased comparable sales. The remaining Macy's stores also saw a slight improvement in comparable sales, especially those that received additional investments.
Macy's faces the challenge of attracting more customers, particularly millennials and Gen Z shoppers. The company has introduced new exclusive brands and revamped existing ones to cater to the preferences of these demographic groups. Additionally, Macy's has been dealing with a takeover bid by activist investors seeking to buy the company and take it private. Despite these challenges, Macy's remains optimistic about its future prospects and expects a lift in performance as it continues to implement its turnaround strategy.
Macy's first-quarter earnings report reflects a mix of positive and negative results. While the company exceeded earnings expectations and showed signs of improvement in its turnaround strategy, it also reported a significant decline in net income and revenue. The planned store closures, focus on store investments, and efforts to attract a younger customer base highlight Macy's commitment to adapting to the evolving retail landscape. By addressing these challenges and seizing opportunities for growth, Macy's aims to position itself for long-term success in the competitive retail industry.