Macy’s Inc. logged better-than-expected fourth-quarter earnings and revenues as it looks ahead to a year of “recovery and rebuilding” amid the COVID-19 health crisis.
For the three months ended Jan. 30, the department store recorded adjusted earnings per share of 80 cents, compared with the prior year period’s $2.12 in earnings per share. Analysts had forecasted earnings of 12 cents per share. Revenues fell 18.7% to $6.78 billion, versus Wall Street’s expectations of $6.5 billion.
“Macy’s Inc.’s fourth-quarter results exceeded our expectations across all three of our brands, as we showed continued quarter-to-quarter sales performance improvements and returned to profitability,” chairman and CEO Jeff Gennette said in a statement. “Performance was driven by the home, beauty, jewelry and watch categories, growth in digital sales and by acquiring new customers.”
Comparable sales declined 17.1% on an owned and licensed basis. Digital, however, was a bright spot: Sales on the platform rose 21% over the prior year period, with online penetration at 44% of net sales. Approximately 25% of the retailer’s digital sales was fulfilled from stores, including curbside pickup and same-day delivery.
Macy’s has also been working to reduce its brick-and-mortar fleet as part of its turnaround plan unveiled last February. The chain is in the midst of shuttering underperforming locations as well as making upgrades to stores and investments in merchandising, technology, talent and local marketing.
At the end of the year, Macy’s had roughly $1.7 billion in cash and retained about $3 billion in untapped capacity in its revolving asset-based credit facility. Its annual guidance factored in pandemic-related challenges in the spring, with momentum building in the back half of 2021: For the 2021 fiscal year, it anticipates net sales of in the range of $19.75 billion to $20.75 billion and adjusted earnings per share of 40 cents to 90 cents. Gennette also shared that the company predicts annual digital sales to reach $10 billion within the next three years.
“We have made progress on the Polaris transformation strategy we introduced a year ago,” the chief executive added. “We are accelerating several elements, including our focus on digital and omnichannel sales, improving customer value and building the infrastructure to support the growth of our business. We believe these actions will propel us to stronger performance in 2021 and beyond.”