New York – Macy’s Inc. execs pointed to green shoots after consolidated sales and profits declined in the third quarter.
The company saw consistent sales growth in at its Macy’s First 50 locations and a healthy performance at its luxury retail banners, Bloomingdale’s and Bluemercury. Quarter-to-date, comparable sales continue to trend ahead of third quarter levels across the portfolio, according to Tony Spring, company chairman and CEO.
“Our third quarter results reflect the positive momentum we are building through our Bold New Chapter strategy,” he added.
Here are 5 key takeaways from this morning’s Q3 review call with investors:
1: Home sales at Macy’s stores, while still weak, showed sequential improvement in Q3 compared to the second quarter. At Bloomingdale’s, home was soft “in certain areas,” Spring said. He did not elaborate.
2: Within big-ticket home categories at Macy’s stores, mattresses are doing better than furniture. Although Macy’s has a new big-ticket team in place, Spring predicted interest rates will need to come down further before sales kick up in meaningful way. “We think there can be opportunities for us when we get into the latter part of 2025,” he said.
3: Macy’s private label overhaul will finally reach the home department next year. The company began reviewing all 24 of its store brands in spring 2023 and has refreshed exiting labels or introduced new ones thus far in apparel.
4: The company today upped the number of Macy’s units it will close this year to 65 locations out of the total 150 it plans to shutter by early 2027. Only a few of those doors are located in a single-store market, according to COO/CFO Adrian Mitchell.
5: The customer base for Macy’s stores remains “choiceful” and value-oriented – as demonstrated by a higher penetration of sales in clearance, said Mitchell. The company is assuming those consumers will remain under pressure going into 2025.
Q3 Consolidated Sales and Profits Fall
For the quarter ended Nov. 2, Macy’s Inc.’s consolidated net sales decline 2.4% to $4.7 billion, with comparable sales down 2.4% on an owned basis and down 1.3% on an owned-plus-licensed-plus-marketplace basis.
Sales growth at Macy’s First 50 locations, Bloomingdale’s, and Bluemercury was offset primarily by weakness in Macy’s non-First 50 locations as well as its digital channel and cold weather categories.
Bloomingdale’s net sales were up 1.4%, with comparable sales up 1.0% on an owned basis and up 3.2% on an owned-plus-licensed-plus-marketplace basis. Key drivers included strength in contemporary apparel, beauty and digital.
Bluemercury net sales were up 3.2% and comparable sales were up 3.3% on an owned basis, representing the fifteenth consecutive quarter of comparable sales growth.
Gross margin decreased 60 basis points to 39.6%. Merchandise margin declined 70 basis points due to product mix and the conversion to cost accounting. The decline in merchandise margin was partially offset by efficiencies in the company’s fulfillment network and lower shipped sales volume.
Net income fell nearly 32% to $28 million.
Macy’s Adjusts Full-Year Outlook
Macy’s Inc. today bumped up top-line guidance and lowered its bottom-line forecast for full-fiscal year results. The company now expects:
- Consolidated fiscal year sales of $22.3 billion to $22.5 billion vs. its prior guidance of $22.1 billion to $22.4 billion.
- Consolidated comparable owned-plus-licensed-plus-marketplace sales to decline in a range of 1.0% to flat vs. earlier guidance of down 2.0% to down 0.5%.
- Adjusted EPS of $2.25 to $2.50 vs. prior guidance of $2.34 to $2.69, in part due the deliberate accounting error it discovered in November. The investigation, which involved as single former employee, has been closed, the company announced today.