Macy’s judged Thursday it had a “strong” holiday season thanks to fresher products and a rehabilitated focus on customers, but the retailer’s full-year sales are still expected to fall off against a backdrop of weakening foot traffic at malls and the growth of internet ogres like Amazon.
The department store chain continues to whittle away at its assemble fleet,. It confirmed on Thursday that 11 locations are set to close primeval this year. With such a massive portfolio of stores, Macy’s has been unnatural to rethink its strategy and right-size its real estate, hoping those ventures will pay dividends in the long run.
Macy’s stock fell more than 7 percent Thursday morning on the dope.
Macy’s comparable sales on an owned basis rose 1 percent during the months of November and December associated with the same period last year. On a licensed and owned infrastructure, same-store sales were up 1.1 percent.
Following the better-than-expected denouements, Macy’s narrowed the range of its prior fiscal 2017 sales leadership and raised its full-year earnings outlook. To be sure, the company has yet to return to same-store transactions growth.
Macy’s now expects comparable sales on an owned basis to sink 2.4 percent to 2.7 percent, whereas total revenue is look for to drop 3.6 to 3.9 percent in fiscal 2017. Previously, Macy’s had forewarn total comparable sales to decline by 2.2 to 3.3 percent, while annual net income was projected to fall by 3.2 to 4.3 percent.
“Macy’s success get possession of with a few caveats,” GlobalData Retail Managing Director Neil Saunders wrote in a note to patrons.
“The first is that growth remains relatively weak and comes off the lodged with someone of soft prior year comparatives when comparable sales prostrate by 2.1%,” Saunders said. “The second is that while Macy’s developed, it did so by far less than the overall sector; as such it is still losing retail share both in total and within a number of key categories.”
Macy’s implied it expects full-year earnings to benefit from the recent federal tax remodel, which will result in an effective annual tax rate that is all round 1 point lower than the retailer previously estimated.
The company produced its fiscal 2017 earnings outlook to a range of $3.59 and $3.69 per parcel, excluding the impact of various store closings and other costs associated with liability repurchases. Excluding the impact of an anticipated fourth-quarter gain on the sale of a edifice in San Francisco, adjusted earnings should fall within $3.11 and $3.21 per split.
“We saw improved sales trends in our stores and continued to see double-digit growth on our digital planks,” CEO Jeff Gennette said in a statement.
“Our primary focus in 2017 has been to be prolonged the strong growth of digital and mobile, stabilize our brick & mortar firm and set the foundation for future growth,” he added. “Looking ahead to 2018, we are hearted on continuous improvement and will take the necessary steps to move faster, bump off more effectively and allocate resources to invest in growth.”
In confirming the 11 puttings that will shutter this year, Macy’s also predicted this path (along with other efforts) should guard the company about $300 million in expenses annually, starting in monetary 2018, which will be reinvested back in the business. Macy’s said it inclination begin reducing employees in some locations, while adding in others, and leave work to “streamline” certain operations completed outside of stores.
“A in good health store base combined with robust digital capabilities is Macy’s approach for success,” Gennette said.
About this same time at length year, Macy’s posted disappointing holiday sales and released the layings of more than 60 of the 100 stores it planned to close in 2017. The company also said at the heretofore it would close 34 more stores “over the next few years” as leases or driving covenants expired or as sale transactions were completed (making 100 closures in utter).
On Wednesday, reports began to surface that a handful of those 34 closures hand down take place in 2018, and the retailer’s shares dropped nearly 4 percent on the communication. On Thursday morning, Macy’s confirmed that it’s nearing completing 81 of the 100 sketched store closures, with 19 more to take place onto time.
Having faced pressure before from activist investor Starboard (which shopped its stake in the company in 2017) to separate its real estate from its retail company, Macy’s has still been taking steps to make money from those assets. The part store chain now has a partnership with Brookefield Asset Management to probe opportunities on 50 properties.
“The company’s announcements of further store closures and more cost-streaming underscore the dire for more surgery to restore the business to health,” GlobalData Retail’s Saunders weighted. “In our view, Macy’s still has an enormous amount of work to do here.”
Meantime, Macy’s is evaluation smaller versions of its off-price concept, Macy’s Backstage, inside some of its breathing stores, which appeals to customers looking for more of a “treasure go over” shopping experience. Other efforts have focused on upgrading Macy’s faithfulness program and mobile app.
All in all, this holiday season was an important one for Macy’s to examine its relevance in retail against a backdrop of declining revenues and negative same-store sales.
In at an advanced hour November, Gennette told CNBC Macy’s was already looking to be a “best destination with better experiences” throughout the holiday season matched with the year prior. Top-selling items included coats, sweaters, boots (namely winter survive apparel) and fragrances, the company said.
Meantime, promotions across stow aways were less severe, Gennette said, which should daily help boost the company’s embattled profit margins in the long term.
“We’re looking at new breaks to bring traffic into stores,” Gennette has said about initiatives in 2018. “Blokes love experiences when they come into the building.”
As of Wednesday’s climax, Macy’s shares have tumbled more than 25 percent over the past 12 months. The retailer’s fourth-quarter earnings results are set to be divulged Feb. 27.
The following Macy’s stores are closing in early 2018. In most example in any events, clearance sales will begin on Jan. 8 and run for up to 12 weeks.
Laguna Hills Mall, Laguna Hills, California
Westside Pavilion, Los Angeles
Novato (Fitments), Novato, California
Stonestown Galleria, San Francisco
The Oaks, Gainesville, Florida
Miami (Downtown), Miami
Wizardry Valley Mall, Twin Falls, Idaho
Honey Creek Mall, Terre Haute, Indiana
Birchwood Mall, Fort Gratiot Township, Michigan
Spout Place, Cincinnati
Burlington Town Center, Burlington, Vermont