Macy’s Inc. predicted a first-quarter operating loss in the range of $905 million and $1.11 billion as the department store giant was forced to shut stores to slow the spread of the coronavirus. First-quarter sales are expected in the range of $3 billion to $3.03 billion, down from $5.50 billion a year earlier, a decline of 45 percent.
The operating loss excludes estimated pre-tax non-cash goodwill and long-lived asset impairment charges expected to be recorded for the first quarter of 2020. In the year-ago period, operating earnings were $203 million.
Macy’s had earlier this month said it would report its first-quarter earnings on July 1 as significant business disruptions due to the pandemic had led to delays in preparing its financial statement.
“This is a challenging time for the country, for retail and for Macy’s, Inc. COVID-19 has impacted the lives of many of our colleagues and customers, and health and safety remain our top priority. We closed all of our stores – Macy’s, Bloomingdale’s and Bluemercury – on March 18, which had a significant impact on our first-quarter results,” said Jeff Gennette, chairman and chief executive officer. “Looking back, our performance in February was solid and in line with our expectations, but we saw a precipitous decline in sales with the store’s closure in March. As a developed omnichannel retailer, we experienced a steady uptick in our digital business in April, which was encouraging, but only partially offset the loss of sales from the stores. The digital performance was driven by strong execution and enhanced fulfillment options, including curbside pickup where allowed.”
“We began reopening our stores on May 4 and, as of this week, have approximately 190 Macy’s and Bloomingdale’s stores open in their full formats. We expect another 80 Macy’s stores to open for Memorial Day weekend. We have enhanced health and safety standards across all of our stores and facilities. We are also offering curbside pickup in many of our locations, including some stores that remain closed to the public. With two weeks of results from reopened stores, customer demand is moderately higher than we anticipated. Customers also responded positively to our Mother’s Day gifting strategy. Even in times of social distancing, our customers want to celebrate the special occasions in their lives, and we help them do that safely. We are closely watching consumer behavior as we reopen more stores, and we remain flexible as we navigate this crisis. We expect business to recover gradually. I want to thank our teams who are re-setting plans daily, innovating quickly and executing well,” Gennette continued.
“We notified our banking partners early on of our plans to access additional financing, and this process is on track. We are confident we will obtain this financing before it is needed, allowing us to improve our financial flexibility. We are taking the right steps to ensure that Macy’s, Inc. will emerge on the other side of this crisis a strong, resilient company and ready to serve our customers,” Gennette continued.
The pre-announcement came as Gennette and Paula Price, chief financial officer, participated Thursday morning in a fireside chat with Matt Boss, managing director, senior research analyst at J.P. Morgan.
As previously announced, Price has made the decision to leave the company as of May 31, 2020. She will continue in her current role until that date, and in order to support a well-ordered transition, Price will remain an advisor to the company through November 2020. Upon Price’s departure, Felicia Williams, a seasoned Macy’s, Inc. veteran who currently serves as senior vice president, controller and enterprise risk officer, will become interim chief financial officer. Williams will serve as interim chief financial officer until a permanent replacement has been named.
Williams has served in her current role since 2016. Previously, Williams was a vice president, responsible for enterprise risk and internal audit. Williams has been with Macy’s, Inc. since 2004 and has held various leadership positions across financial services, accounting and risk management. Prior to joining Macy’s, Inc., Williams held various roles at The Coca-Cola Company and Bristol-Myers Squibb. She is a Certified Public Accountant.
Photo courtesy Macy’s