Key Takeaways
- Macy’s shares rose Tuesday as the retailer reported first-quarter results that declined from last year’s levels, but not as much as analysts had expected.
- In the quarter, Macy’s ended a proxy battle by appointing two new board members, and also announced a restructuring plan to close 150 locations as it looks to return to higher levels of profitability.
- The retailer also updated its guidance for the full fiscal year, lifting the bottom levels of the projected ranges for revenue and comparable sales.
Shares of the iconic retailer Macy’s (M) rose in intraday trading Tuesday after the release of a first-quarter earnings report that indicated the company’s turnaround plan including store closures and cutting jobs is proving to be beneficial so far.
Macy’s had a busy quarter, ending a proxy battle in April by appointing board members from an activist investor, while also announcing a new turnaround plan that included closing 150 locations as the company has looked for ways to cut costs.
The company, which operates its namesake Macy’s brand along with Bloomingdale’s and Bluemercury, reported first-quarter fiscal 2024 profit and revenue above analyst expectations.
Total revenue came in at $5 billion, just above the $4.97 billion analysts had projected, per estimates compiled by Visible Alpha, but slightly below the $5.17 billion Macy’s generated in the first quarter of 2023.
The retailer made just $62 million, or 22 cents per share, in profit for the quarter, less than half of the $155 million, or 56 cents per share, it made in the year-ago quarter but above the $47.59 million and 16 cents per share analysts had estimated.
Macy’s also updated its guidance for the full fiscal year, narrowing its projected net sales range to $22.3 billion to $22.9 billion, lifting the lower end from its February outlook of $22.2 billion. Comparable sales for the full year are expected to range from a 1% decline to a 1.5% increase from last year’s levels, slightly more optimistic than the 1.5% potential decline Macy’s had previously used as the low end of the range.
Turnaround Plan Progressing, Proxy Fight Over
Macy’s has closed hundreds of stores in recent years as retail sales have continued to shift online, and the retailer announced an official turnaround plan earlier this year that included plans to shutter 150 “underproductive” stores.
While closing Macy’s locations, the retailer said it planned to expand the footprint of the higher-end Bloomingdale’s and Bluemercury brands while also opening more smaller-format Macy’s locations that would cost less to operate.
“Although early days, our investments in product, presentation and experience are gaining traction and reinforce our belief that longer-term, Macy’s, Inc. can return to sustainable, profitable growth,” Macy’s Chief Executive Officer (CEO) Tony Spring said.
The retailer also ended a proxy fight in the quarter, appointing a pair of board members from activist investor Arkhouse Management, which has also been bidding to take the company private with partner Brigade Capital Management. Macy’s has rejected offers, including one in December that would have valued the company at $21 per share, but has also said it is “continuing to engage” with offers.
Macy’s shares rose 2.2% to $19.51 by 9:52 a.m. ET Tuesday but are down more than 2% in 2024.