Macy’s Inc. has warned that it could lose roughly $1 billion as the coronavirus pandemic shutters its stores across the country.
The department store chain, which released today preliminary sales and operating results for the first quarter, expects to report an operating loss in the range of $905 million and $1.11 billion, compared with last year’s net income of $203 million. It also predicts first-quarter sales will land between $3 billion and $3.03 billion — down from the prior year’s $5.50 billion.
As COVID-19 spread across the United States in mid-March, Macy’s was forced to close all of its locations. It began reopening some units on May 4 and is now back to business at about 190 of its namesake as well as Bloomingdale’s outposts. The company also anticipates opening back up another 80 Macy’s stores this upcoming Memorial Day weekend.
“With two weeks of results from reopened stores, customer demand is moderately higher than we anticipated,” shared chairman and CEO Jeff Gennette. “We are closely watching consumer behavior as we reopen more stores, and we remain flexible as we navigate this crisis. We expect business to recover gradually.”
During a virtual fireside chat with Gordon Haskett Research Advisors in late April, Gennette told analysts that Macy’s would come out of the crisis a “smaller company” as its business continues to struggle with a stalled turnaround plan and imminent debt deadlines.
The retailer estimates that it will end the first quarter with $1.52 billion in cash on hand, versus $737 million a year ago. Its total debt, however, has swelled: Macy’s predicts its balance sheet to show $5.66 billion in debt — up from the previous year’s $4.72 billion.
Yesterday, the company appointed Felicia Williams as interim CFO, effective June 1. Williams, who currently serves as SVP, controller and enterprise risk officer, takes the post from Paula Price, whose exit at the end of the month was previously announced.
As of Wednesday’s market close, Macy’s shares have declined 70% in the year to date. Its market capitalization currently sits at $1.6 billion. The company expects to report other select preliminary first-quarter financial results on June 9 and will log its Q1 2020 earnings report on July 1.