Macy's reports mixed holiday quarter, unveils new strategy

The company recorded a net sales decrease of 1.7% year-on-year, amounting to $8.1bn in the fourth quarter.

However, Macy's demonstrated resilience in adjusted diluted earnings per share, reaching $2.45, surpassing the prior year's $1.88.

The gross margin also saw an improvement, rising to 37.5% in the quarter, marking a 340 basis point increase from the year-on-year.

Operating cash flow remained robust, with $1.3bn generated in 2023, culminating in over $1bn in cash reserves.

The company did, however, report a diluted loss per share of 26 cents for the quarter, largely due to a $1bn charge related to impairment, restructuring, and other costs.

In terms of sales performance, Macy's saw a decline in both digital and brick-and-mortar sales, with digital sales dropping by 4% compared to the prior year.

Comparable sales also dwindled, indicating shifting consumer preferences and behaviour in the retail landscape.

Looking ahead, Macy's said it expected full-year sales to range between $22.2bn and $22.9bn for 2024, reflecting the company's expectations for continued operational progress and investment in customer-centric initiatives.

Macy's also outlined a new strategic plan, dubbed ‘A Bold New Chapter’, aimed at repositioning it to enhance customer experience and foster growth.

As part of the initiative, it announced intentions to close about 150 locations over the next three years.

“Throughout the fourth quarter, we delivered an improved omnichannel experience, with effective merchandising and a clear demonstration of value that resulted in a strong close to the year,” said chief executive officer Tony Spring.

“Our portfolio of iconic and globally recognized nameplates, healthy balance sheet and fortified operations position us to execute A Bold New Chapter.

“This strategy is designed to create a more modern Macy’s, Inc. that is expected to generate meaningful value for our shareholders in the years ahead.”

At 0759 EST (1259 GMT), shares in Macy’s were down 1.09% in pre-market trading on the New York Stock Exchange, at $19.09.

Reporting by Josh White for Sharecast.com.