Are Macy’s Digital Hopes Too Little Too Late?

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Macy’s Inc. (NYSE: M) reported its fiscal first-quarter financial results before the markets opened on Thursday. The retailer said that it had $0.24 in earnings per share (EPS) and $5.34 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.34 in EPS and revenue of $5.47 billion. The same period from last year had $0.40 in EPS and $5.77 billion in revenue.

Comparable sales on an owned basis were down 5.2% in the first quarter and down 4.6% on an owned plus licensed basis.

During the first quarter, the company opened new Macy’s stores in Murray, Utah, and Los Angeles, as well as 10 new freestanding Bluemercury beauty specialty stores and 11 new Macy’s Backstage stores.

In terms of guidance for the 2017 full year, the company expects to see comparable sales on an owned plus licensed basis to decline between 2.0% and 3.0%. At the same time, total sales are expected to be down between 3.2% and 4.3%.

The consensus estimates for the 2017 full year are $3.45 in EPS and $24.8 billion in revenue.

On the books, Macy’s cash and cash equivalents totaled $1.2 billion at the end of the quarter, up from $734 million in the first quarter of last year.

Jeff Gennette, president and CEO of Macy’s, commented:

Our first quarter sales and earnings results were consistent with our expectations, and we remain on track to meet our 2017 guidance. We are encouraged by the performance of the pilot programs we tested last year in categories like women’s shoes, fine jewelry, and furniture and mattresses. We look forward to expanding these successful initiatives nationally this year and anticipate they will have a measurable impact on our performance starting in the second quarter, building through the fall. Additionally, our digital platforms showed continued strong growth in the first quarter. In 2017, we are focused on taking actions to stabilize our brick and mortar business, including the testing and iteration of additional pilot programs in order to bring them to scale in future years. At the same time, we will invest to aggressively grow our digital and mobile business, while continuing the integration of our online and offline experience to allow our customers to shop the way they live.

Shares of Macy’s closed Wednesday at $29.34, with a consensus analyst price target of $34.21 and a 52-week trading range of $27.72 to $45.41. Following the release of the earnings report, the stock was down 10% at $26.40 in early trading indications Thursday.