THIS ISN’T GOOD: Macy’s Posts Nearly $4 Billion In Losses
NEW YORK , UNITED STATES — Last April 2020, DM Fashion Book reported that American department store Macy’s Inc. said it would furlough most of its employees during the time of the post (see it here) as all stores of the department chain operator remained closed due to the worldwide spread of the coronavirus (COVID-19).
The company, which has about 130,000 employees, early April shut its more than 800 stores, suspended quarterly dividend and withdrew its 2020 forecasts. It has also drawn down all its available credit and frozen hiring and spending to offset the impact of the pandemic on sales.
It is now confirmed that Macy’s Inc. reported a staggering $3.58 billion loss on Wednesday for its coronavirus-hit first quarter as store shutdowns resulted in the department store chain recording a $3 billion impairment charge.
The global health crisis has forced brick-and-mortar retailers to tap credit lines, lay off employees and suspend dividends and buybacks in a bid to stay afloat.
“While our stores are reopened, we expect that the Covid-19 pandemic will continue to impact the country for the remainder of the year,” Chief Executive Jeff Gennette said in a statement, adding that the retailer did not expect another total shutdown of stores.
Macy’s, which also owns Bloomingdale’s, said net sales for the first quarter through May 2 nearly halved to $3.02 billion.
Last month, Macy’s said it would lay off about 3,900 employees in corporate and management positions in a bid to save cash, did not provide an updated outlook.
Macy’s has faced a huge slump in traffic at its stores, especially those in malls and urban areas harder hit by lockdowns aimed at curbing the spread of the virus, Gennette said.
He doesn’t expect the “virtual disappearance of international tourism spending” to “recover any time soon.”
In turn, Macy’s has invested heavily in improving its digital business and personalised marketing, clearing out unsold inventory and offering services like curbside pickup. “Whether in staffing, fleet size, online initiatives, or real estate monetisation, it [Macy’s] is at last implementing the radical surgery that should have begun years ago,” said Craig Johnson, president at retail consultancy Customer Growth Partners.
“Today’s results should not be seen as any kind of surprise, but as a necessary reflection of reality — in short, a deep reset of the entire enterprise.”
Shares were down about 3 percent in premarket trading.
On a per-share basis, it reported a net loss of $11.53 in the first quarter ended May 2 compared with a profit of 44 cents a year earlier.
Excluding one-time items, the company lost $2.03 per share, meeting expectations, according to IBES data from Refinitiv.
The company expects second-quarter comparable sales to improve roughly 6-7 percentage points, compared to the 35 percent decline in the first quarter, it said.
As of May 2, Macy’s had $1.52 billion in cash and cash equivalents, and $18.58 billion in total liabilities and shareholders’ equity.
Photos Credit: nycgo.com