Categories AlphaGraphs, Earnings, Retail

Macy’s Q4 profit drops 45% but beats estimates

Department store giant Macy’s Inc (M) reported a 45% dip in earnings for the fourth quarter hurt by a lackluster holiday season. The quarterly results exceeded analysts’ expectations while the company guided full-year 2019 earnings below the consensus estimates.

Net income attributable to the company’s shareholders plunged 45% to $740 million and earnings dipped 46% to $2.37 per share. Adjusted earnings decreased by 4.2% to $2.73 per share.

Net sales declined by 2.5% to $8.46 billion. Comparable sales on an owned basis were up 0.4%, and on an owned plus licensed basis, they were up 0.7%. The holiday season started off strong on the back of Black Friday and Cyber Week but then weakened by mid-December.

Looking ahead into the full year 2019, the company expects sales growth to be about flat and earnings, excluding settlement charges, impairment, and other costs, in the range of $3.05 to $3.25 per share. Comparable sales are anticipated to be in the range of flat to up 1% each on owned and on owned plus licensed basis.

An infographic on Macy's fourth quarter 2018 earnings results
Macys Q4 2018 Earnings Infographic

For the fourth quarter, asset sale gains after-tax fell to $204 million from $230 million in the previous year quarter.

The company said it experienced another quarter of double-digit growth in digital. Macy’s also saw continued improvement in its brick and mortar trends with the Growth50 stores outperforming the fleet. Macy’s said it is heading into 2019 a stronger business than it was a year ago, with healthier stores, a growing e-commerce business and a mobile experience that is resonating with its customers.

The company has launched a comprehensive, multi-year program focused on growing its profitability rate by improving productivity across the enterprise. As an initial step in this, Macy’s announced a restructuring that lowers the complexity of the upper management structure. In addition to the expected 2019 savings, the company anticipates the activities to fuel the productivity plan over the next 3-5 years and contribute significantly to profitable growth.

Beginning in 2019, Macy’s predicts the restructuring actions to generate annual expense savings of $100 million. For fiscal 2018, the company recorded one-time charges of about $80 million pre-tax for restructuring activities.

Shares of Macy’s ended Monday’s regular session up 1.25% at $24.36 on the NYSE. Following the earnings release, the stock inched down 0.49% in the premarket session.

 

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