Macy’s first quarter 2018 report was excellent. Total sales increased 3.6%, to $5.4 Billion. Comparable store sales, including licensed sales, increased 4.2%. Fully diluted earnings per share rose to $0.45 compared to $0.26 per share in 2017. Management indicated that results were above their expectations, and they raised their full year earnings forecast by $0.20 to $3.75 to 3.95. Adding to earnings will be the sale of the I. Magnin store in San Francisco at the end of the fiscal year.
The excellent results reflect successes across the entire company.
- Within Macy’s, it was driven by fashion sales for women, men and children as well as strength in jewelry, handbags, and furniture.
- The renovation of the Bloomingdale’s Manhattan flagship store is progressing, most notably with the opening of the shoe floor which is 40% bigger than the shoe salons were in the past. It has added to the fashion momentum.
- The opening of 18 Backstage locations in the first quarter was also a positive contributor to sales growth.
- And, BlueMercury spas also had a good quarter.
Management had shifted the Family and Friends 30% off sales event from the second quarter to the first quarter this year. This change was necessary because of the timing of Easter, and the promotion was necessary to stimulate sales in the quarter. Management indicated that the sales event in the quarter added about 2.5% in sales; sales without the event would have increased by about 1.7%. For now, management is cautious about the rest of the year, suggesting that the full year will see an increase in comparable store sales of 1% to 2%.
The company also incurred an impairment charge of $19 Million due to the wind-down of the Macy’s China Limited venture. The company has come to a mutual agreement with Fung Retailing Limited to end that operation. Instead, Macy’s e-commerce team in San Francisco will manage the ongoing China business on Alibaba’s internet platform TMall, as well as in social media channels. Additional charges relating to this change may occur during the rest of the year.
Jeff Gennette, Chairman and CEO, outlined his priorities for the company. They include adding Backstage Off-price departments in 100 stores this year (18 have already been opened), expanding the loyalty program to reach more customers by making it available to non-Macy credit card holders, and developing a strong private label program. (Private label has already increased from 29% to a goal of 40% of total sales.) In addition, Gennette sees more products being shipped from vendors directly to customers to speed delivery.
Another major initiative is the redevelopment of 50 stores. These stores – across the United States – are of various sizes and will give the company an opportunity to develop a more dynamic look and approach for their clientele. Included in these efforts is the testing of various apps – including quick check-out, which will add speed to transactions.
Macy’s is clearly on the move. The recent acquisition of STORY will change customer experiences as they shop in stores. STORY will engage shoppers with brand activations that are dynamic and designed to change looks frequently. All of these new initiatives will support the growth of the company. I am very optimistic for the outlook Macy’s in this very competitive environment.
Macy’s first quarter 2018 report was excellent. Total sales increased 3.6%, to $5.4 Billion. Comparable store sales, including licensed sales, increased 4.2%. Fully diluted earnings per share rose to $0.45 compared to $0.26 per share in 2017. Management indicated that results were above their expectations, and they raised their full year earnings forecast by $0.20 to $3.75 to 3.95. Adding to earnings will be the sale of the I. Magnin store in San Francisco at the end of the fiscal year.
The excellent results reflect successes across the entire company.
- Within Macy’s, it was driven by fashion sales for women, men and children as well as strength in jewelry, handbags, and furniture.
- The renovation of the Bloomingdale’s Manhattan flagship store is progressing, most notably with the opening of the shoe floor which is 40% bigger than the shoe salons were in the past. It has added to the fashion momentum.
- The opening of 18 Backstage locations in the first quarter was also a positive contributor to sales growth.
- And, BlueMercury spas also had a good quarter.
Management had shifted the Family and Friends 30% off sales event from the second quarter to the first quarter this year. This change was necessary because of the timing of Easter, and the promotion was necessary to stimulate sales in the quarter. Management indicated that the sales event in the quarter added about 2.5%in sales; sales without the event would have increased by about 1.7%. For now, management is cautious about the rest of the year, suggesting that the full year will see an increase in comparable store sales of 1% to 2%.
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