Macy’s reported a loss on an adjusted basis in the third quarter that was significantly lower than Wall Street’s targets. Comparable sales were down 21.0 percent even as stores continued to recover and digital sales grew 27 percent.
“Macy’s, Inc. third-quarter results reflect solid performance across all three brands – Macy’s, Bloomingdale’s and Bluemercury. Our results were driven by disciplined cost management, strong execution by our colleagues and an early start to the holiday shopping season,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “Customers shopped our brands across all channels in the third quarter and responded well to our expanded fulfillment offerings, such as curbside, store pickup and same-day delivery. Our digital business delivered strong growth and sales in our stores continued to recover. Customers have shifted their spending to casual apparel and categories they can enjoy as they stay at home. Several of these categories, including home furnishings, jewelry, and fragrance, have generated double-digit sales growth compared to last year.”
“Looking to Holiday 2020, we know this year is different. We are committed to bringing the joy of the season to America as we do every year. From next week’s Thanksgiving Day Parade to reimagined family gatherings, we will help our customers and their families celebrate in style. We have the right gifting assortment with newness from value to luxury, and our expanded fulfillment options allow customers to shop safely and conveniently, in-store or online,” continued Gennette. “We continue to watch the resurgence of COVID-19 and its potential impact on our business. Our teams are executing well and have shown the flexibility and agility to adjust plans and provide a great omnichannel experience to our customers.”
Third Quarter Highlights
- Positive EBITDA one quarter sooner than expected;
- Strong liquidity position with approximately $1.6 billion in cash and approximately $3 billion of untapped capacity in the company’s asset-based credit facility;
- Total sales were down 22.9 percent to $3.99 billion from $5.17 billion a year ago and compared to Wall Street’s consensus estimate of $3.86 billion;
- Digital sales grew 27 percent over third quarter 2019. Digital sales penetrated at 38 percent of total owned comparable sales;
- Comparable sales down 21.0 percent on an owned basis and down 20.2 percent on an owned plus licensed basis, due to continued stores recovery and continued growth of its digital business;
- $3.86 billion expected;
- Inventory down 29 percent from third quarter 2019. The company exited the quarter in a clean inventory position;
- Gross margin of 35.6 percent compared to 23.6 percent in the second quarter of 2020, an improvement of approximately 12 percentage points. The improvement was driven by disciplined inventory management, better sell-through of both full-price and clearance merchandise and lower clearance markdowns;
- Selling, general and administrative (“SG&A”) expenses of $1.7 billion, down $476 million from third quarter 2019, illustrating efficient expense management and improved colleague productivity in stores;
- The net loss came to $91 million, or 29 cents a share, against income of $2 million, or 1 cent, a year ago; and
- The adjusted net loss came to $60 million, or 19 cents a share, against earnings of $21 million, or 7 cents, a year ago. Wall Street’s consensus estimate was a loss of 79 cents.
Macy’s, Inc. previously withdrew its 2020 earnings guidance due to ongoing uncertainty as a result of COVID-19. The company is providing limited guidance for 2020, which can be found on the company’s website here.
Photo courtesy AP