Macy's pulls through tough year-end quarter and looks ahead with ambition

American department store icon Macy’s has come through the fourth quarter on top of its game. The group’s figures did not fall as badly as feared. For 2021, the company is aiming for results that could exceed market expectations, although the group is still cautious.

Grim picture

A glance at the bare figures paints a rather grim picture. Macy’s saw its sales plummet 18.7 per cent to 6.78 billion dollars (5.58 billion euros) in the all-important year-end quarter. Earnings per share – the profit figure Wall Street values most – came to 0.80 dollars (0.7 euros) if non-recurring costs linked to restructuring and store closures are excluded. That is a reduction by half compared to last year.

Nevertheless, Macy’s performed better than expected. Analysts had forecast sales of 6.5 billion dollars and earnings per share of just 11 cents, according to the consensus gathered by MarketWatch. All in all, a good performance. According to Macy’s itself, this is largely due to a few specific product categories: jewellery, watches and home beauty.

Growth spurt in online sales

But more importantly: Macy’s launched a significant growth spurt in online sales. Compared to a year earlier, online sales increased by no less than 21 percent. A quarter of these online sales were also handled through points of sale, either through a click & collect system or home delivery within 24 hours. Macy’s is firmly committed to its online segment. In the next three years, digital sales should reach 10 billion dollars a year.

In the coming financial year, Macy’s is aiming for sales between 19.75 and 20.75 billion dollars (16.3 – 17.1 billion euros). If the group lands on the higher end of this range, it will once again outperform analysts. On average, they are aiming for annual sales of 20.1 billion dollars (16.6 billion euros). The profit forecast could also potentially beat analyst expectations. While analysts are aiming for 75 cents per share (0.62 euro), Macy’s is forecasting a fairly wide range of 0.40 to 0.90 dollar per share. In other words, the company is aiming higher than the analysts, but is giving itself a wide margin of error.

“Our outlook assumes continued challenges related to the corona pandemic during spring,” Macy’s said in its accompanying commentary. “However, we see momentum building towards the second half of 2021.”