NEW YORK — While creditors mull over its plan to distribute $3.6 billion in value, R.H. Macy & Co. gave them something else to chew on Monday: strong comparable-store sales gains and above-plan operating results in February.
Comparable-store sales in February were up 5.7 percent, and the company said March same-store sales would be even better.
Peter N. Schaeffer of Johnson Redbook Service said that while the Macy’s numbers were “OK,” they wouldn’t be of much help in the battle to fend off an expected challenge by Federated Department Stores.
“I would like to see those strong comparable-store sales numbers continue,” Schaeffer added. The analyst said Macy’s, with expenses down and margins up slightly, could have helped its case against Federated with “spectacular store-for-store sales gains.”
Federated’s planned merger with Macy’s could provide better value for Macy’s creditors. The plan has been placed on hold by court-appointed mediator Cyrus Vance while he works with various creditor groups on the Macy plan. Vance told Federated to wait until the week of April 11 before proposing its plan, and Federated agreed.
On Monday, Macy’s reported that for the four weeks ended Feb. 26, it lost $6.25 million before interest, taxes, depreciation and amortization (EBITDA) compared with a $12.47 million EBITDA loss the previous year. It noted however, that the figures were above plan and that its cash position was very strong.
In February, traditionally a soft, bottom-line month due to the high rate of seasonal markdowns, Macy’s produced an operating loss of $31 million, down from an operating loss of $34.5 million in 1993.
The comp-store gain of 5.7 percent came after adjusting for closed stores and the restructuring of its electronics business. Overall sales, including the same adjustments, rose 5.1 percent against strong sales increases a year earlier.
Total sales gained less than 1 percent this year, to $406.4 million, compared with $403.45 million a year ago. Sales at leased departments slipped to $4.28 million from $4.6 million last year.
“Comparable-store sales numbers looked like some of the best I’ve seen from Macy’s in a long time,” said one analyst. “They are right up there with some of their peers for February and are very encouraging,” he added.
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The analyst, speaking on the condition of anonymity, attributed part of the increase in comparable-store sales to “some pent-up demand for apparel in February after the numerous storms in December and January.”
“I’ve said all along that the key to the comeback will be not just the streamlining and efficiencies Macy’s has accomplished but the improvement of margins by driving the top line,” the analyst noted. “Part of that strategy is getting out of the less profitable businesses they have been in and getting into more profitable ones, like modern sportswear.”
Redbook’s Schaeffer was not that impressed.
“When you compare them to the competition’s comparable-store gains, like Dayton Hudson’s 9 percent, Carter Hawley Hale’s 9.7 percent, Gottschalk’s 13.4 percent and May Department Stores Co.’s 8.9 percent, they are definitely not leading the pack,” Schaeffer said.
He noted, however, that two other Macy’s competitors, Dillard Department Stores and Federated, posted store-for-store sales gains of 1 percent and 1.7 percent, respectively, in February.
In a statement, Myron E. Ullman, Macy’s chairman and chief executive officer, said comparable-store sales gains in March are expected to eclipse the 5.7 percent gain posted in February.
Retail figures this month are skewed by a major snowstorm in March 1993 and by Easter, which falls on April 3 this year, compared with April 11, last year. Macy’s said February was the 13th out of the last 14 months in which it surpassed its plan for EBITDA..