Macy’s (M) reported another quarter of dropping sales as a new CEO looks to engineer a comeback.
The company on Tuesday posted revenue and earnings that were better than the low expectations Wall Street had set for the 165-year-old retailer, which recently rejected a $5.8 billion buyout offer from one of its shareholders, Arkhouse, and its partner Brigade Capital Management.
In the fourth quarter, Macy’s revenue declined 1.7% year over year to $8.12 billion, slightly above estimates of $8.11 billion. Its digital sales decreased by 4%, while same-store sales were down 5.4%.
The retailer clocked $685 million in net income, above the expected $554 million, while its adjusted earnings per share (EPS) of $2.45 beat the expected $1.99.
At its namesake Macy’s chain, same-store sales dropped 6% as consumers pulled back on discretionary goods like women’s shoes and cold-weather apparel. But they continued spending on beauty products like fragrances and cosmetics.
Sales at its luxury chain Bloomingdale’s decreased 1.5%, dragged down by softness in men’s lines and designer handbags. Its cosmetics chain Bluemercury was a small bright spot, growing its sales by 2.3%.
For the full fiscal year 2023, revenue declined to $23.1 billion, 5.5% lower compared with 2022. Same-store sales were down 6.9%, as digital and in-store sales dropped 7% and 5%, respectively.
Macy’s stock was a touch lower in premarket trading on Tuesday, down less than 1%.
Meanwhile, Arkhouse Management is not giving up without a fight, having nominated nine candidates for Macy’s board of directors last week in a proxy battle. Now, Macy’s new CEO, Tony Spring, who only took the helm three weeks ago, unveiled the company’s growth strategy for 2025 and beyond.
Spring, who joined Bloomingdale’s in 1987 and became its CEO in 2014, is dubbing the new strategy “A Bold New Chapter.” The plan is “designed to create a more modern Macy’s, Inc. that is expected to generate meaningful value for our shareholders in the years ahead,” he said in Tuesday’s release.
As part of the initiative, Macy’s is closing 150 underperforming locations, including 50 by year-end. The company did not disclose where these stores are or if it will continue to have a presence in these markets.
It plans to focus its resources on improvements in assortment and investment in digital sales, along with an expansion of small-format stores.
It also plans to open 15 Bloomingdale’s and 30 Bluemecury stores in the next three years and to remodel 30 existing Bluemercury locations.
To better compete with retail behemoths like Amazon (AMZN) and Walmart (WMT), Macy’s is aiming to “rationalize and monetize” its supply chain, streamline fulfilment, improve its inventory, and offer a “scalable” tech platform in the next three years.
As of Monday’s market close, Macy’s traded at $19.30 per share, down 5% over the past year, compared with the S&P 500’s gain of 27%. The original proposal made by Arkhouse on Dec. 1 would see the company go private for $21.00 per share, a 32% premium to Macy’s share price at the time.
The earnings rundown
Here are Macy’s Q4 results versus estimates, according to Bloomberg data.
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Net sales: $8.12 billion versus $8.11 billion
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Adjusted EPS: $2.45 versus $1.99
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Same-store sales: -5.4% versus -5.7%
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Gross margin: 37.5% versus 36.5%
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Adjusted net income: $685 million versus $554 million
Here are Macy’s fiscal 2023 results versus estimates, according to Bloomberg data.
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Net sales: $23.1 billion versus $23.2 billion
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Adjusted EPS: $3.50 versus $3.03
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Same-store sales: -6.9% versus -6.3%
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Gross margin: 38.8% versus 38.4%
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Adjusted net income: $973 million versus $844 million
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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