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|Macy’s, Inc. Reports Positive Comp Sales for November/December|
Annual earnings guidance raised due to solid holiday results and federal tax law change
$300MM in annualized cost savings to be reinvested in the business
“Macy’s had a solid holiday shopping season, and we are pleased that our
November/December performance resulted in positive comp sales for the
period, setting us up for a positive fourth quarter. Consumers were
ready to spend this season, and we delivered with solid execution,
fresher inventory, a curated gift assortment and a focus on customer
experience. We saw improved sales trends in our stores and continued to
see double-digit growth on our digital platforms. Customers also
responded well to our new loyalty program,” said
Macy’s, Inc. saw improved holiday sales across Macy’s, Macy’s Backstage, Bloomingdale’s, Bloomingdale’s The Outlet and Bluemercury, with exclusive gifts showing strong performance. Active apparel, shoes, dresses, coats, fine jewelry, men’s tailored clothing, children's and home were all top performers. Beauty was also a highlight and showed a marked improvement in trend, with particular strength in fragrance, prestige skincare and cosmetic gifting.
“Our primary focus in 2017 has been to continue the strong growth of digital and mobile, stabilize our brick & mortar business and set the foundation for future growth. We’ve made good progress on each, including encouraging trend improvements in our brick & mortar business. A healthy store base combined with robust digital capabilities is Macy’s recipe for success,” continued Gennette. “Looking ahead to 2018, we are focused on continuous improvement and will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth.”
Cost Management to Reinvest in Growth
The company is also taking actions intended to continue improvements in organizational efficiency and to allocate resources to support its growth strategy. Major components of these restructuring activities include:
The company expects annual expense savings of
Update on Store Closures
The company announced the closure of 11 Macy’s stores, 4 of which were
previously disclosed. With these closures, the company will have
completed 81 of the approximately 100 planned store closures announced
Macy’s, Inc. is narrowing the range of its previously provided full-year sales guidance. The company now expects comparable sales on an owned basis to decline between 2.4 percent and 2.7 percent, with comparable sales on an owned plus licensed basis to decline between 2.0 percent and 2.3 percent. Total sales are expected to be down between 3.6 percent and 3.9 percent in fiscal 2017. Total sales for fiscal 2017 reflect a 53rd week, whereas comparable sales are on a 52-week basis.
Excluding the change in federal tax law, Macy’s, Inc. anticipates
earnings results for full-year 2017 to be in the upper end of previously
disclosed guidance. Additionally, due to the timing of its fiscal year,
the company expects federal tax reform to result in an effective annual
tax rate that is approximately one point lower than previously expected
(approximately 36 percent vs. approximately 37 percent). As a result,
the company is raising its full-year 2017 earnings guidance. The company
now expects adjusted earnings per diluted share of between
Fiscal-Year 2017 Adjusted Diluted Earnings Per Share (EPS) Guidance
The recent passage of federal tax reform will also require the company
to re-measure deferred tax balances in fiscal 2017. The company
currently estimates the deferred tax impact of the federal tax rate
reduction from 35 percent to 21 percent will result in a non-cash tax
benefit of approximately
Fourth Quarter Earnings Announcement
Macy’s, Inc. is scheduled to report fourth quarter sales and earnings on February 27, 2018. Additional detail on financial performance will be provided at that time. The company will webcast a call with financial analysts and investors at 10 a.m. ET on February 27, 2018. Macy’s, Inc.’s webcast is accessible to the media and general public via the company's website at www.macysinc.com. Analysts and investors may call in on 800-263-0877, passcode 5302609. A replay of the conference call can be accessed on the website or by calling 888-203-1112, passcode 5302609, about two hours after the conclusion of the call.
Details on Macy’s Store Closings
The following Macy’s stores will be closing in early 2018. In most cases, clearance sales will begin on January 8, 2018, and run for approximately 8 to 12 weeks.
Burlington Town Center,
*Previously disclosed closure
About Macy’s, Inc.
Macy’s, Inc. is one of the nation’s premier retailers. With fiscal 2016
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are
based upon the current beliefs and expectations of Macy’s management and
are subject to significant risks and uncertainties. Actual results could
differ materially from those expressed in or implied by the
forward-looking statements contained in this release because of a
variety of factors, including conditions to, or changes in the timing
of, proposed real estate and other transactions, prevailing interest
rates and non-recurring charges, the effect of federal tax reform, store
closings, competitive pressures from specialty stores, general
merchandise stores, off-price and discount stores, manufacturers’
outlets, the Internet, mail-order catalogs and television shopping and
general consumer spending levels, including the impact of the
availability and level of consumer debt, the effect of weather and other
factors identified in documents filed by the company with the
Important Information Regarding Non-GAAP Financial Measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, management believes that certain non-GAAP financial measures provide users of the Company's financial information with additional useful information in evaluating operating performance. Management believes that providing supplemental changes in comparable sales on an owned plus licensed basis, which includes the impact of growth in comparable sales of departments licensed to third parties, assists in evaluating the Company's ability to generate sales growth, whether through owned businesses or departments licensed to third parties, on a comparable basis, and in evaluating the impact of changes in the manner in which certain departments are operated. In addition, management believes that excluding certain items from diluted earnings per share attributable to Macy's, Inc. shareholders that are not associated with the Company’s core operations and that may vary substantially in frequency and magnitude period-to-period provides useful supplemental measures that assist in evaluating the Company's ability to generate earnings and leverage sales and to more readily compare these metrics between past and future periods.
The reconciliation of the forward-looking non-GAAP financial measure of changes in comparable sales on an owned plus licensed basis to GAAP comparable sales (i.e., on an owned basis) is in the same manner as illustrated below, where the impact of growth in comparable sales of departments licensed to third parties is the only reconciling item. In addition, the Company does not provide the most directly comparable forward-looking GAAP measure of diluted earnings per share attributable to Macy’s, Inc. shareholders because the timing and amount of excluded items (e.g., restructuring, asset impairment, store closing, settlement charges, net premiums and fees associated with debt repurchases, and certain other benefits/costs) are unreasonably difficult to fully and accurately estimate.
Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company's financial position, results of operations or cash flows and should therefore be considered in assessing the Company's actual and future financial condition and performance. Additionally, the amounts received by the Company on account of sales of departments licensed to third parties are limited to commissions received on such sales. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.
Change in Comparable Sales
The following is a reconciliation of the non-GAAP financial measure of changes in comparable sales on an owned plus licensed basis, to GAAP comparable sales (i.e., on an owned basis), which the company believes to be the most directly comparable GAAP financial measure.
1Updated Guidance Including Federal Tax Reform does not include the estimated non-cash tax benefit related to the re-measurement of deferred tax balances in fiscal 2017.
Source: Macy’s, Inc.