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Macy's lowers full year sales outlook, to close more stores

By Prachi Singh

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Business

Macy's has announced that its comparable sales on an owned basis increased 1 percent in the months of November and December 2017 combined, compared to the same period last year. On an owned plus licensed basis, comparable sales increased 1.1 percent during the period under review. The company also announced that it is lowering full year sales guidance and plans the closure of 11 Macy's stores, four of which were previously disclosed.

"Macy's had a solid holiday shopping season, and we are pleased that our November/December performance resulted in positive comp sales for the period, setting us up for a positive fourth quarter. We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms. Customers also responded well to our new loyalty program," said Jeff Gennette, Macy's CEO commenting on the update.

Macy's added that the company saw improved holiday sales across Macy's, Macy's Backstage, Bloomingdale's, Bloomingdale's The Outlet and Bluemercury, with exclusive gifts showing strong performance. Active apparel, shoes, dresses, coats, fine jewellery, men's tailored clothing, children's and home were all top performers and beauty was also a highlight and showed a marked improvement in trend, with particular strength in fragrance, prestige skincare and cosmetic gifting.

Macy’s to reduce staff, close 11 store in early 2018

The company is also taking actions intended to continue improvements in organizational efficiency and to allocate resources to support its growth strategy. Major components of these restructuring activities, the company said, include staffing adjustments across the stores organization with reductions in some stores and increases in others; further streamlining in some non-store functions; and closure of 11 stores in early 2018. The company expects annual expense savings of 300 million dollars from these actions beginning in fiscal-year 2018, which it intends to reinvest in the business.

The company announced the closure of 11 Macy's stores, four of which were previously disclosed. With these closures, the company will have completed 81 of the approximately 100 planned store closures announced in August 2016. The company intends to close approximately 19 additional stores as leases or operating covenants expire or sale transactions are completed. Including the stores announced today, Macy's has closed 124 stores since 2015.

Macy's lowers full year sales outlook

The company is narrowing the range of its previously provided full-year sales guidance. The company now expects comparable sales on an owned basis to decline between 2.4 percent and 2.7 percent, with comparable sales on an owned plus licensed basis to decline between 2 percent and 2.3 percent. Total sales are expected to be down between 3.6 percent and 3.9 percent in fiscal 2017.

Excluding the change in federal tax law, Macy's anticipates earnings results for full-year 2017 to be in the upper end of previously disclosed guidance. Additionally, due to the timing of its fiscal year, the company expects federal tax reform to result in an effective annual tax rate that is approximately one point lower than previously expected (approximately 36 percent vs. approximately 37 percent). As a result, the company is raising its full-year 2017 earnings guidance. The company now expects adjusted earnings per diluted share of between 3.59 dollars and 3.69 dollars in 2017. Excluding the impact of the anticipated fourth quarter gain on the sale of the Union Square Men's building in San Francisco, adjusted earnings per diluted share are expected to be between 3.11 dollars and 3.21 dollars in 2017.

Picture:Facebook/Macy's

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