Macy’s has reported steady earnings in the latest quarter, with net sales of $4.9 billion, a 3.8 per cent decrease year on year.
The company’s diluted earnings per share experienced growth at $0.53 versus $0.26 in the same period last year. However, net sales decreased by 3.8 per cent compared to the previous year.
Macy’s gross margin rate improved by 240 basis points to 40.5 per cent, accredited to reduced discounting and better inventory management. Selling, general, and administrative (SGA) expenses amounted to $2 billion, with total expenses as a percentage of total revenue increasing by 120 basis points due to lower net sales.
Among the company’s nameplate segments, the core Macy’s brand experienced a 4.4 per cent decline in net sales, with comparable sales down by 4.5 per cent. However, Macy’s “First 50” locations – stores selected for focused investment and refurbishment – reported a 0.8 per cent increase in comparable sales.
Macy’s CEO, Tony Spring, acknowledged the challenges but expressed confidence in the company’s strategic direction.
“Our colleagues executed with discipline, supporting gross margin expansion and effective expense control throughout the organisation,” he added. “We are seeing signs of our strategy taking root, including two consecutive quarters of positive comparable sales in Macy’s First 50 locations.”
Other parts of the business saw mixed results. Bloomingdale’s reported a slight decline in sales, down 0.2 per cent, while Bluemercury saw a modest increase, with sales up 1.7 per cent and comparable sales rising by 2 per cent.
The company also saw growth in ancillary revenue streams, including a $4 million increase in Macy’s Media Network revenue and a $5 million rise in credit card revenues.
Neil Saunders, MD of GlobalData, provided a broader perspective on Macy’s performance: “There is no disguising the fact that Macy’s second-quarter numbers are poor.
“Not only are sales declines accelerating, but they are also doing so off the back of a weaker prior year number when revenue dipped by a sharp 8.4 per cent.”
Saunders said the big problem with the numbers is that they paint a “headline of decline” at a time when Macy’s is trying to convince investors that the company is on a new trajectory.
“However, as critical as we often are of Macy’s, we think it is important to look at the nuance behind the headlines and cut the company a little slack,” he concluded.
