Dims shine near a closed Macy’s Herald Square as people remain at home to stop the spread of coronavirus on Tread 29, 2020 in New York City.
Noam Galai | Getty Images
Macy’s said Thursday it expects first-quarter rummage sales to fall by as much as 45%, and it could report a loss of more than $1 billion, largely because of the Covid-19 emergency.
Its shares fell about 1.5% in premarket trading on the news.
In an investor presentation about its first-quarter forecast, the retailer also articulate it expects to have “sufficient liquidity” to execute on its 2020 priorities.
Macy’s has said it doesn’t expect to report financial first-quarter earnings until July 1 because of disruptions stemming from the pandemic.
America’s department store controls have been battered by the crisis. They were struggling even before it hit. Neiman Marcus, Stage Hoards and J.C. Penney have filed for bankruptcy protection. Kohl’s earlier this week reported first-quarter sales were down 44%. Nordstrom, which is set to make public earnings next week, said it is permanently closing 16 stores.
Macy’s said it expects to report an serving loss of $905 million to $1.11 billion, compared with net income of $203 million a year ago. And it has forecast first-quarter sales events to be in the range of $3 billion to $3.03 billion, down from $5.50 billion a year ago.
“We expect business to recoup gradually,” CEO Jeff Gennette said in a statement.
But the worst is not behind it. The company is expecting profits during the second cantonment to be pressured even more than during the first quarter, management said Thursday morning during a understood fireside chat with J.P. Morgan analyst Matt Boss. Promotional activity is going to be heightened to try to sell dried-out merchandise, it said.
“The scale of the deterioration underlines the fact that Macy’s has a very high cost base that, ordered with furloughs, simply drains the business when trade declines,” GlobalData Retail Managing Director Neil Saunders rumoured in a note to clients.
“Macy’s struggles to maintain sales levels because much of what it sells is just not that compelling,” Saunders told.
Macy’s stores temporarily shut on March 18, and are just beginning to reopen across the U.S. The company is also present curbside pickup at some stores.
As of this week, Macy’s said roughly 190 of its namesake department depend ons and Bloomingdale’s shops have fully reopened. The company said another 80 Macy’s stores will be unenclosed for this weekend’s Memorial Day holiday. It said it expects to have most of its locations open again by late June.
“With two weeks of terminates from reopened stores, customer demand is moderately higher than we anticipated,” Gennette said.
He added that the public limited company saw a “steady uptick” in online sales during April but that “only partially offset the loss of sales from the department stores.” Categories that have shown strength on the web include active wear, home goods and kids’ apparel, the presence said.
Meantime, Macy’s has been well into the financing process to raise debt, to come up with additional liquidity to meteorological conditions this crisis.
“We notified our banking partners early on of our plans to access additional financing, and this process is on follow,” Gennette said Thursday. “We are confident we will obtain this financing before it is needed, allowing us to improve our economic flexibility.”
The company is estimating it will end the first quarter with $1.52 billion in cash on hand, compared with $737 million a year ago. It contemplates the total debt on its balance sheet to be $5.66 billion, compared with $4.72 billion a year ago.
Macy’s has also chose senior vice president Felicia Williams as interim CFO, effective May 31.
Macy’s shares as of Wednesday’s market close are down uncountable than 70% this year. The company has a market cap of $1.6 billion.
Read the full press release from Macy’s here.