Macy’s Profits Blow Past Forecasts Despite Soft Holiday Quarter, Announces Job Cuts for 100 Execs

Shares for Macy’s Inc. are jumping in premarket trading after the company posted fourth-quarter profits that blew past forecasts and announced a series of updated strategic initiatives to reduce costs.

Targeting about $100 million in annual cost savings starting in fiscal 2019, Macy’s new restructuring plan will see the company cut 100 positions at the VP level or above to speed up decision-making.

“The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs and be more responsive to changing customer expectations,” Gennette said. “Importantly, these changes build the foundation we need to achieve meaningful enterprise productivity improvements. These actions impact colleagues who have made strong contributions to the company over the years, and I thank them for their service.”

The department store chain, which enacted several strategies last year to upend digital competition and boost in-store experiences, said today its fourth-quarter adjusted profits fell 4 percent year over year to $2.73 per share — but were significantly higher than the $2.53 per share market watchers predicted. (Reported profits were $2.37 per diluted share, compared with $4.38 in the same period last year.)

Macy’s revenues were in line with analysts’ expectations, at $8.5 billion, with comparable sales (on an owned-plus-licensed basis) up 0.7 percent. On an adjusted basis, comps were up 2 percent. (Q4 revenues represented a decline of about 2 percent from the same period last year.)

CEO Jeff Gennette said the firm’s earlier strategic initiatives gained steam toward the second half of the 2018 fiscal year — although the company’s results for the holiday season fell short.

“2018 was an important year for Macy’s Inc. as we changed the trajectory of the company and delivered positive comparable sales for the full year. I’m pleased with the impact of our strategic initiatives,” Genette said in a statement. “Looking at the fourth quarter of 2018, while we delivered positive comparable sales against what was a strong holiday season in 2017, results were lower than our expectations.”

Nevertheless, the Macy’s chief noted the company experienced another quarter of double-digit growth in digital as it reaped the rewards of new concepts such as a Facebook partnership and a stronger omnichannel platform.

“We also saw continued improvement in our brick-and-mortar trends, with the Growth50 stores outperforming the fleet,” he said.

For the full year, Macy’s revenues were flat at $25 billion, with adjusted net income up 8 percent to $1.3 billion.

Looking ahead, the department store calls for fiscal 2019 comparable sales to flat to up 1 percent; with flat sales and earnings in the range $3.05 to $3.25 range.

As of 8:30 am ET, Macy’s shares were in the green 1.3 percent to $24.68.

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