Macy’s sales and profits declined in the first quarter due to higher costs and financial challenges, but the results still exceeded Wall Street expectations. The company, which also operates Bloomingdale’s and Bluemercury, reported positive effects from its turnaround efforts, such as closing underperforming stores and upgrading others. CEO Tony Spring noted that all income groups are being more cautious with their spending, with higher income customers focusing on luxury items and lower tier customers prioritizing rent and family obligations.
Spring also mentioned that consumers will continue to face financial pressures, and Macy’s is adapting by expanding its new, small-format stores while closing underperforming locations. The company plans to open 30 small-format stores by 2025, tripling the current count, and close 150 unproductive stores over the next three years. Additionally, Macy’s is upgrading its remaining traditional stores, adding more salespeople and visual displays, as well as focusing more on luxury sales to cater to customers seeking higher-end goods and services.
Despite the decline in earnings and revenue, Macy’s reported adjusted per share earnings that surpassed Wall Street expectations. Comparable store sales fell, but Bluemercury saw an increase in sales, while Bloomingdale’s sales remained steady. The company highlighted the success of its revamped traditional locations, which saw comparable sales gains in the quarter. Macy’s credit card revenues also declined due to higher delinquency rates, leading to pressure from investors to accelerate growth.
In April, Macy’s appointed two independent directors to its board, backed by Arkhouse Management, to address investor concerns and accelerate growth. The company’s shares fell slightly in early trading following the earnings report. Despite the challenges faced in the retail industry, Macy’s remains optimistic about its future outlook and is focusing on strategic initiatives to drive growth and profitability. The company’s turnaround efforts and focus on customer preferences and convenience are expected to drive positive results in the coming quarters.
