Macy's Looks to Thin Upper Management as Sales Fall -- Update
February 26 2019 - 10:10AM
Dow Jones News
By Aisha Al-Muslim
Macy's Inc. gave a mostly flat outlook for fiscal 2019 as the
retailer said it would further streamline its management structure
to reduce costs and be faster in responding to changing customer
expectations.
The Cincinnati-based company said Tuesday it launched a
multiyear productivity program to reinvest in the business.
Starting this year, the company expects its restructuring efforts
to generate annual savings of $100 million. An initial part of the
plan calls for the company to reduce the complexity of its
upper-management structure, it said.
Macy's reported that net sales for its latest quarter fell 2.5%
to $8.46 billion, above the consensus forecast of $8.45 billion
from analysts polled by Refinitiv.
Same-store sales from stores it owns grew 0.4% for the fourth
quarter, below the FactSet estimate of a 0.8% increase. Including
stores it owns and licensed departments, same-store sales rose
0.7%. Excluding the 53rd week calendar shift, comparable sales were
up 2% including licensed departments.
The company recorded a profit of $740 million, or $2.37 a share,
down from $1.35 billion, or $4.38 a share, a year earlier. Adjusted
earnings were $2.73 a share, above the $2.53 a share analysts
polled by Refinitiv were looking for.
Macy's shares rose 0.3% to $24.43 in early trading Tuesday.
Shares are down about 11% in the past year.
For fiscal 2019, the company projected that net sales would be
roughly flat. The company also expects comparable sales to be flat
to up 1%. Excluding settlement charges, impairment and other costs,
the company also projected adjusted earnings per share of $3.05 to
$3.25, compared with analysts' estimates of $3.29 a share.
In 2019, Macy's said it will focus on improving its supply chain
and inventory management, as well as widening its customer base. It
plans to do that by expanding its remodeling efforts to another 100
stores and adding off-price Backstage locations to 45 Macy's
stores.
The company also said it would continue to invest in categories
with strong market share such as dresses, fine jewelry, big-ticket
items, men's tailored clothes, women's shoes and beauty, it
said.
For fiscal 2018, the company recorded one-time, pretax
restructuring charges of about $80 million. However, the
anticipated savings is expected to fuel the productivity plan over
the next three to five years.
The retailer has been investing in a group of stores it calls
magnets, adding new lighting and fixtures and a better assortment
of merchandising and technological innovations, while trying to
shrink other, less-promising locations.
The company operates about 680 department stores under the
Macy's and Bloomingdale's names, and nearly 190 specialty stores
that include Bloomingdale's The Outlet, Bluemercury, Macy's
Backstage and Story.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
(END) Dow Jones Newswires
February 26, 2019 09:55 ET (14:55 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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