THE WHAT? Macy’s has reported its results for the third quarter of the current financial year. The US department store saw sales tumble 21 percent yoy to US$3,990 million and reported a loss of US$91 million, a far cry from the US$2 million net income reported in the same period last year.
THE DETAILS Macy’s, however, was upbeat, pointing out that digital sales were up 27 percent over third quarter 2019, accounting for 38 percent of the total and that the company was exiting the quarter in a clean inventory position with strong liquidity of US$1.6 billion in cash and US$3 billion of untapped credit capacity.
Margin has also improved on 2Q2020, now 35.6 percent versus 23.6 percent in the three months to June 30, 2020, an improvement of 12 percentage points.
However, Bloomberg pointed out that Macy’s comparable sales drop was significantly worse than at rivals Kohl’s and TJX (-13 percent and -5 percent respectively), and that Macy’s locations in enclosed malls, and heavy fashion lean have worked against it since the pandemic hit; fashion demand has fallen significantly and consumers feel safer in suburban strip malls than they do in enclosed spaces or city centers.
THE WHY? Jeff Gennette, Chairman and Chief Executive Officer of Macy’s, Inc, comments, “Macy’s, Inc. third quarter results reflect solid performance across all three brands – Macy’s, Bloomingdale’s and Bluemercury. Our results were driven by disciplined cost management, strong execution by our colleagues and an early start to the holiday shopping season. Customers shopped our brands across all channels in the third quarter and responded well to our expanded fulfillment offerings, such as curbside, store pickup and same-day delivery. Our digital business delivered strong growth and sales in our stores continued to recover. Customers have shifted their spending to casual apparel and categories they can enjoy as they stay at home. Several of these categories, including home furnishings, jewelry and fragrance, have generated double-digit sales growth compared to last year.”