Macy's Q4 Sales Slightly Sour, Talks Bold New Strategy Of 150 Store Closures In Two Years

Macy’s Inc M shares are trading lower on Tuesday premarket.

The company reported fourth-quarter adjusted EPS of $2.45, beating the analyst consensus of $1.96.

Quarterly revenue of $8.12 billion missed the analyst consensus of $8.15 billion. Sales fell 1.7% year over year.

Digital sales decreased 4% year over year, while Brick-and-mortar sales were roughly flat.

Comparable sales, on a 13-week basis, were down 5.4% on an owned basis and down 4.2% on an owned-plus-licensed basis.

The company reported fourth quarter gross margin rate of 37.5%, up 340 basis points year-over-year.

Merchandise margin improved 260 basis points year over year, primarily due to lower clearance markdowns.

Store Closures: Macy’s announced a new strategy, “A Bold New Chapter,” designed to return the company to enterprise growth. The company plans to focus on Macy’s resources by closing approximately 150 underproductive locations through 2026.

The company plans to take advantage of its leadership position in the luxury market and expand Bloomingdale’s and Bluemercury footprint by up to 45 locations through 2026.

The company plans to monetize $600 million-$750 million of assets through 2026.

Macy’s ended the quarter under review with over $1 billion of cash on balance sheet and generated $1.3 billion of operating cash flow.

Outlook: Macy’s sees FY24 adjusted EPS of $2.45-$2.85 versus $2.76 estimate. The firm plans net sales of $22.20 billion-$22.90 billion versus $22.96 billion estimate.

Beginning in 2025, Macy’s sees low-single-digit annual comparable Owned + Licensed + Marketplace sales growth and free cash flow to return to pre-pandemic levels.

Price Action: M shares are trading lower by 2.02% to $18.91 premarket Tuesday.

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