Macy’s witnessed its first-quarter net income plunge 60 per cent year over year to $62 million on net sales that dipped 2.8 per cent to $4.8 billion.
“As we have previously noted, the investments being made will take their toll on the bottom line,” said Neil Saunders, GlobalData MD.
“Some of this is down to the lower productivity of the business overall, but some is also a function of higher impairment and restructuring costs.”
Earlier, the department store chain said it will shut 150 stores but expand its Bloomingdale’s and BlueMercury businesses under a three-year strategy to achieve “sustainable, profitable growth”.
During the quarter, the company’s comparable sales declined 1.6 per cent on an owned basis and fell 0.4 per cent on an owned-plus-licensed-plus-marketplace basis.
Comparable sales of its first 50 locations, including within stores Macy’s plan to retain, rose 3.3 per cent on an owned basis and inched 3.4 per cent higher on an owned-plus-licensed basis.
Meanwhile, Bloomingdale’s comparable sales increased 0.8 per cent on an owned basis and climbed 0.3 per cent on an owned-plus-licensed-plus-marketplace basis.
BlueMercury’s comparable sales jumped 4.3 per cent on an owned basis.
“All that said, the numbers are encouraging, and they underline why Macy’s is right to cut out the deadwood of underperforming stores and to make investments in locations that have a future,” said Saunders.
“The forward challenge is to ensure that this investment and focus continue across the balance of the year. In our view, there is still a significant amount of work required to correct all the problems in stores.”
For the full year, Macy’s forecasts net sales of $22.3 billion to $22.9 billion.
