Macy’s reports another decline in sales but sees ‘traction’ in turnaround

Macy’s said its comparable-store sales in the United States fell 1.2 percent from the same quarter a year earlier. The retailer has not reported sales growth since the first quarter of 2022. It reported a profit of $62 million in the first quarter, less than half of the profit it made in the same quarter last year.

Sales of the eponymous Macy’s brand were the weakest among all the company’s brands, falling 1.6 percent. Bloomingdale’s sales rose 0.8 percent, and Bloomercury sales rose 4.3 percent.

Macy’s slightly raised the low end of its sales forecast for the year to $22.3 billion, from $22.2 billion expected in February. It also slightly raised its profit forecast.

The company’s stock rose in premarket trading, and is roughly flat this year.

Macy’s Chief Executive Tony Spring and Chief Financial Officer Adrian Mitchell said on multiple calls with analysts that they expect consumers to remain under pressure through the rest of the year.

“Inflation pressures remain, and they are feeling that pressure,” Mr. Spring said.

David Swartz, senior equity analyst at Morningstar, saw worrying signs about consumer spending in Macy’s earnings statement. Credit card revenue was down in the first quarter compared to the previous year, which the company attributed to higher delinquency rates.

“This suggests that their customers are purchasing things with Macy’s credit cards that they cannot actually purchase because they are not paying their credit card bills on time or perhaps not at all,” Mr. Swartz said. “That doesn’t give you a lot of confidence that their customers are in a very good financial position right now.”

Retail sales, not adjusted for inflation, increased just over 3 percent in the first four months of the year compared to last year, according to the Census Bureau. But sales at department stores fell 2.4 percent during that period.

Macy’s is undergoing a major transformation, including closing 150 stores over the next three years. After downsizing, Macy’s expects to have 350 stores, more than half the number before the pandemic.

Macy’s has begun to differentiate between stores it plans to keep and those it is closing. It said the 50 stores representing the company’s future based on geography, staffing and other factors saw comparable sales growth of 3.3 percent in the first quarter.

In a statement on Tuesday, Mr Spring said the performance of those stores was a “leading indicator” for what the remaining fleet will look like after store closures.

“Although early days, our investments in product, presentation and experience are gaining momentum and strengthening our confidence that long-term Macy’s Inc. can return to sustainable, profitable growth,” he said.

Mr. Spring has also faced pressure from an activist investor group that believes the company is not doing enough to improve its business. In December, the group made an offer to acquire Macy’s and take it private, which the retailer rejected. In March, the group increased its bid and valued the company at $6.6 billion, which was higher than the company’s current market value.

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