Most people who follow Macy’s Inc. (NYSE: M) agree that its earnings were good enough to suggest that it can survive, at least short term. However, its forecast brought doubt about its future. After it announced earnings, the shares bounced up and down. The fact that they traded lower is, in itself, a sign of ongoing pessimism.
The conventional wisdom is that Amazon.com Inc. (NASDAQ: AMZN) has wounded Macy’s, along with every other retailer in America. In truth, Macy’s has wounded itself here. There was not a single bit of bragging about online sales improvement. The closest thing was a convoluted description of Macy’s plans made by Jeff Gennette, Macy’s president and chief executive officer:
We are working with a mindset of continuous improvement and will adapt our business in order to reach our goal of stabilizing the brick-and-mortar business while investing for accelerated growth in digital and mobile. Key to this strategy is engaging our customers with an improved experience that includes more elevated and exclusive assortments, a better integration of technology both online and in the store, and additional enhancements intended to drive traffic and sales. There is still work ahead of us, however, I’m encouraged by the progress we’re making on overall performance.
He is doomed to fail if Macy’s cannot say it has made very substantial strides in online sales.
Rather the focus was on cash flow, the effect of store closings, same-store sales and modest earnings. Sales for the quarter dropped from $5.87 billion in the period that ended July 30 to $5.56. Net income rose, but margins remained tiny. Net for the quarter was $116 million, compared to $11 million last year.
Macy’s, Inc. reaffirms its previously provided guidance for full-year 2017. The company expects comparable sales on an owned basis to decline between 2.2 percent and 3.3 percent, with comparable sales on an owned plus licensed basis to decline between 2.0 percent and 3.0 percent. Total sales are expected to be down between 3.2 percent and 4.3 percent in fiscal 2017
Gennette’s initiatives are off to a bad start.
Shares of Macy’s traded down more than 4% to $22.01 shortly after Thursday’s opening bell. The 52-week trading range is $20.85 to $45.41.