Macy’s Inc. said it expects to report a steep loss for the first quarter but it was in line with expectations. The leading department store chain also indicated that re-opened stores are outperforming expectations.

Net sales in the quarter fell 45.2 percent to $3.02 billion from $5.5 billion a year ago.

The net loss came to $652 million, or $2.10 a share, against earnings of $136 million, or 44 cents, a year ago. Adjusted net income came to was a loss of $630 million, or $2.03, against income of $137 million, or 44 cents, the prior year.

EBITDA (earnings (loss) before interest, taxes, depreciation and amortization) was a loss of $723 million against earnings of $446 million a year ago. Adjusted EBITDA was a loss of $689 million against earnings of $447 million.

The operating loss was $969 million against operating profits of $203 million.

Figures were within the range that the department store had previously estimated. On May 21, Macy’s said it expected to report a first-quarter operating loss between $905 million and $1.1 billion and sales around $3 billion.

Macy’s said its results are not yet complete and the preliminary results do not include the non-cash impact of goodwill and long-lived asset impairment charges, which are expected to have a material impact on the company’s reported results. The Company will release its first-quarter earnings results and hold a related call on July 1, 2020.

“The COVID-19 pandemic significantly impacted our first-quarter sales and earnings results, but I am proud of the way our team navigated this difficult period and maintained the business while our stores were closed,” said Jeff Gennette, chairman and chief executive officer. “Our strong digital business sales trend continued throughout May, and it is encouraging to see that as we reopen a store, the digital business in that geography continues to be strong. By June 1, we had approximately 450 stores reopened, with the majority opened in their full format. Our reopened stores are performing better than anticipated. Importantly, we are receiving positive feedback on the curbside pickup experience and our efforts to create a safe and welcoming shopping environment.”

“We are seeing strong sell-through of seasonal merchandise and anticipate that we will exit the second quarter in a clean inventory position. The holiday season will be crucial, and the team is working now to get the right merchandise and assortment in place,” continued Gennette.

Macy’s pre-released results were reported as Gennette and interim CFO Felicia Williams will be participating Tuesday in Cowen and Company’s ‘The New Retail Ecosystem’ virtual conference.

In a separate statement, Macy’s announced the closing on approximately $4.5 billion of new financing including its previously announced $1.3 billion of 8.375 percent senior secured notes as well as a new $3.15 billion asset-based credit agreement. In addition, the Company has amended, and substantially reduced, the credit commitments of its existing $1.5 billion unsecured credit agreement. The Company intends to use the proceeds of the notes offering, along with cash-on-hand, to repay the outstanding borrowings under the existing $1.5 billion unsecured credit agreement.

With the closing of these financings, the Company expects to have sufficient liquidity to address the needs of the business including funding operations and the purchase of new inventory for upcoming merchandising seasons, resolving its accrued payables obligations and repaying upcoming debt maturities in fiscal 2020/21.

“We are pleased with the strong demand from new investors in our notes issuance which allowed us to tighten pricing and increase the size of the offering. The high quality of our real estate portfolio positioned us well to execute this offering. Additionally, the continued commitment from our bank group allowed us to more than double the size of our existing revolving credit facility. Together, the notes offering and asset-based credit agreement provide Macy’s, Inc. with approximately $4.5 billion of borrowings and commitments giving us sufficient flexibility and liquidity to navigate our current environment and fund our business for the foreseeable future,” said Gennette. “Combined with our ongoing Polaris initiatives, we are confident this liquidity will ensure Macy’s, Inc. remains a strong company to work for, invest in and partner with.”

Photo courtesy Macy’s