Good news has been the exception in the department store sector in recent years, but Macy’s managed to pull that rabbit out its hat Wednesday, reporting that comparable-store sales were up 3.9% in Q1 compared with a year ago.
Earnings were also up — $0.45/share ($0.48 excluding impairment) during the first quarter, compared with $0.26 a year ago.
The positive Q1 results come after a strong fourth quarter for the retailer, but also after a number of tough years in which Macy’s closed some of its weaker stores, a strategy that continued into this year.
In the company’s conference call Wednesday, CEO Jeff Gennette said, “we continued our momentum from the holiday season into the first quarter, in fact exceeding our own expectations on most measures. “I’m pleased to report strong performance across all three brands, Macy’s, Bloomingdale’s and Bluemercury … and all regions of the country. It’s very encouraging to see the continued improvement in our brick-and-mortar business.”
Gennette said the chain is on the path to “return Macy’s Inc. to consistent comparable-store sales growth.”
The company now anticipates comp-store sales growth in the 1% to 2% range this year, a more optimistic outlook than previously. It also expects earnings between $3.75/share and 3.95/share, 5% higher than in 2017 and $0.20 more than its previous 2018 outlook.
Macy’s momentum reflects healthier inventory and a willingness to experiment, the Wall Street Journal reports. Recently, for instance, the company rolled out more of its Macy’s Backstage locations, an off-price concept within its standard stores.
The company also saw a boost from international tourism, CNBC reports. Macy’s is concluding its joint venture with Fung Retailing Limited in China, which is one of its top overseas markets. Instead, the department store chain will remain active on e-commerce platform TMall, as well as social media channels in that country.
“We did have the wind at our back, as consumer spending remains strong,” Gennette said on the call. “We anticipate this to continue through the year.” He detailed the initiatives the company is undertaking to boost business, including a reinvented loyalty program, its Backstage locations, the expansion of the goods assortment on its website, more in-store options to pick up online orders and an initiative called “Growth 50.”
Gennette said there are 50 stores where the company is implementing the best of what it tested in 2017. “This work will complete in time for the fall season, and we intend to come out of the year with a model that we can scale,” Gennette said. That will involve new merchandising strategies, more staff in key areas, facility upgrades and local marketing efforts.
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