Updated 4:17 p.m. ET March 6
Macy’s Inc., continuing to invest in its best stores while shedding poor-performing locations, showed progress in the fourth quarter of fiscal 2024 by turning profitable and posting a small comparable sales gain.
Net income for the fourth quarter ended Feb. 1 was $342 million, or $1.21 per diluted share, compared to a loss of $128 million, or $0.47 per diluted share in the year-ago period.
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Operating income rose to $500 million, from a loss of $149 million in the year-ago period.
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Adjusted earnings before interest, taxes, depreciation and amortization, which excludes charges associated with restructurings, impairment and settlements, reached $903 million versus $1.1 billion in the year-ago period.
Net sales decreased 4.3 percent to $7.8 billion, though comparable sales were up 0.2 percent on an owned, licensed and marketplace basis. It should be noted that the fourth quarter of fiscal 2024 included 13 weeks, while the fourth quarter of fiscal 2023 had 14 weeks.
“We are pleased with the progress we’ve experienced in our Bold New Chapter strategy,” Tony Spring, Macy’s Inc.’s chairman and chief executive officer, told WWD, just after the retailer released its fourth-quarter and year-end results. “We are entering 2025 in a stronger position than 2024 and with more confidence and conviction in our strategy.”
But Spring tempered his remarks, saying, “because we are seeing a level of consumer uncertainty, we have a more cautious level of guidance” for 2025.
He’d like to see even more progress in the business soon. “I’m hungry. I want more. We’re determined, but let’s recognize the progress made,” Spring said.
The company is projecting 2025 sales of between $21 billion and $21.4 billion or about $1 billion less than the $22.3 billion generated in 2024. Comparable sales are projected down 2 percent to 0.5 percent, and “go-forward” sales are seen down 2 percent to flat. Adjusted diluted earnings per share are seen at $2.05 to $2.25, compared to $2.07 per share in 2024.
Wall Street early Thursday morning showed disappointment with Macy’s sales results and projections by lowering the stock price slightly. At the close of the market, and after the conference call with management, the stock was down 0.7 percent to $13.22, which is well below the 52-week high of $22.10.
Like other retailers, Macy’s Inc. faces what Spring considers “myriad unknowns.” That would include the impact of the Trump administrations’s new tariffs on China, Canada and Mexico triggered this week, stock market gyrations, persistent inflation with high food and housing costs, declining consumer confidence and Americans lately curtailing their spending, in the aftermath of a solid holiday selling period for retailers.
Generally, retail executives sense heightened uncertainty in the air this year compared to last year, which after the presidential election and declines in the prices of general merchandise and oil, saw a spike in spending during the holiday season. The impact of tariffs on retailers during the first quarter is expected to be minimal but retailers’ acknowledge it’s difficult to gauge further into the future in light of the administration’s fast-changing tactics.
“For the year, the merchandising team continued its assortment matrix evolution, including the ongoing private brand enhancements, adding more relevant national brands, scaling other brands to additional doors and editing brands that are no longer serving our customer,” Spring said during the conference call. “Digital improved its site navigation search engine optimization and introduced a more competitive pricing algorithm, leading to a return to positive comps in the fourth quarter.”
Macy’s Bold New Chapter strategy involves investing in “go-forward” departments with increased staffing in high-traffic areas such as women’s shoes and fitting room areas, fresher products and improved visuals. The retailer previously indicated that due to what it saw as a positive consumer response to the first 50 Macy’s locations getting the most attention, an additional 75 Macy’s locations in fiscal 2025 will receive similar increased investments in assortments and service. Macy’s has designated 350 go-forward department stores, and is closing about 150 department stores.
The strategy also centers around “accelerating and differentiating luxury” and striving for organic growth and store expansion at both Bloomingdale’s and Bluemercury, Spring said. Three Bloomie’s stores including the first women’s only Bloomie’s location opened last year. Bloomie’s are scaled down, specialized versions of the full-line Bloomingdale’s department stores.
Bloomingdale’s has a particular opportunity to capitalize on the vendor issues at Saks Global, and is believed to have been able to increase distribution with certain brands to additional locations, and added a few brands to the mix. The fact that Bloomingdale’s is profitable and not overstored, operating just 32 department stores, furthers the opportunity.
Last year, 17 Bluemercury stores were opened and seven were remodeled. Fifteen percent of the Bluemercury store base has been updated. Spring said that Bluemercury is also pursuing new brand partnerships.
A third focus of the strategy involves “simplifying and modernizing end-to-end operations, creating a more efficient network that benefits the entire organization,” Spring said. “In fiscal 2024, we meaningfully improved our ability to meet customer demand. We improved both the percentage of orders delivered in five days or less and replenishment in-stocks by about 400 basis points and shortened the amount of days from when an order is placed to ship by roughly 1,100 basis points, all while maintaining strong inventory discipline which enabled us to end the year with improved inventory composition and lower aged inventories.…As we focus on go-forward business performance, we are cognizant of the external environment and the ongoing myriad unknowns.”
Comparable owned, licensed and marketplace sales growth at Macy’s First 50 locations, Macy’s digital channel, Bloomingdale’s and Bluemercury was offset primarily by weakness in Macy’s non-First 50 and non-go-forward locations.
Macy’s Inc. go-forward business comparable sales were up 0.6 percent on an owned, licensed and marketplace basis.
By division, Macy’s net sales were down 5.3 percent, with comparable sales down 0.9 percent on an owned, licensed and marketplace basis.
Macy’s go-forward business comparable sales were down 0.5 percent on an owned, licensed and marketplace basis. First 50 locations comparable sales were up 1.2 percent on an owned-plus-licensed basis.
Bloomingdale’s net sales were up 2 percent, with comparable sales up 6.5 percent on an owned, licensed and marketplace basis.
Bluemercury net sales were up 2.4 percent and comparable sales were up 6.2 percent on an owned basis.
Other revenue of $239 million, including those from credit cards and the Macy’s Media Network, decreased $16 million, or 6.3 percent.
For all of 2024, Macy’s Inc.’s net sales decreased 3.5 percent to $22.3 billion, with comparable sales down 0.9 percent on an owned, licensed and marketplace basis.
Macy’s Inc. go-forward business comparable sales were down 0.6 percent on an owned-plus-licensed-plus-marketplace basis.
By division, Macy’s net sales were down 4.2 percent, with comparable sales down 1.6 percent on an owned, licensed and marketplace basis. Macy’s go-forward business comparable sales were down 1.3 percent on an owned, licensed and marketplace basis.
Bloomingdale’s net sales were up 1 percent, with comparable sales up 2.5 percent on an owned, licensed and marketplace basis. Bluemercury net sales were up 2.8 percent and comparable sales were up 4 percent on an owned basis.
Asset sale gains of $144 million were $83 million higher. As part of its Bold New Chapter strategy, the company closed 64 non-go-forward Macy’s locations which contributed to current year asset sale gains.
The Macy’s division this year has begun operating under the cost accounting method, which Spring said brings more transparency into item-level profitability, including the cost of goods and discounts, and should result in better buying and execution.
“As we close out the first year of the Bold New Chapter strategy, investments in the customer experience enabled us to achieve our highest comparable sales of the year, our best performance in 11 quarters,” Spring said in a statement Thursday. “At Macy’s, our ‘First 50’ locations delivered four quarters of increased sales, while our luxury nameplates — Bloomingdale’s and Bluemercury — achieved accelerated annual sales growth. As we enter the second year of our strategy, we plan to scale initiatives that are resonating with our customers to drive long-term profitable growth and further unlock shareholder value.”
Adrian Mitchell, Macy’s Inc.’s chief operating officer and chief financial officer, added, “Building on our momentum, we continue to elevate the customer experience, deliver operational excellence and make prudent capital investments. We remain committed to generating healthy free cash flow and returning capital to shareholders through share buybacks and predictable quarterly dividends.”