A living soul looks into a closed Macy’s Inc. department store near Union Square in San Francisco, California, U.S., on Thursday, June 18, 2020.
Michael In a word | Bloomberg | Getty Images
The road to recovery at Macy’s is likely going to be a rocky one because of the coronavirus pandemic.
The retailer cautioned Wednesday that sales are falling again in states such as Texas where Covid-19 cases are on the rise. And the responsibility store operator expects this pattern could play out as the crisis continues.
Macy’s said sales at its stow aways are currently down about 35% from year-ago levels.
“We are taking the conservative view and pulling that bias through the back half of the year. If trends improve, we will react aggressively to meet customer demands,” Chief Management Jeff Gennette said on an earnings call.
Gennette said the company does not expect another national shutdown because of the coronavirus. But it has designs in place in case there are some “regional flare-ups,” and it needs to close smaller groups of stores for a second pass.
Meanwhile, Macy’s digital business has shown “very strong performance,” with consumers holed up at home and some looking to pass their government-issued stimulus checks. Gennette said the retailer expects online sales to continue at a “healthy double-digit tumour rate to the back half of the year by all metrics.”
Macy’s shares were down more than 4% in afternoon exchange, on the heels of the company reporting fiscal first-quarter results.
The trend of store sales spiking and declining could Rather commence to play out at a number of other retailers, not just Macy’s. Apple is already closing stores for a second time in nations including South Carolina and Florida. Microsoft has decided to close all of its bricks-and-mortar stores forever.
In Texas, Macy’s bid sales were ticking up as the local economy was reopening. But about two weeks ago and with Covid-19 cases surging, the group saw a 15-point sales drop in the state, according to Gennette.
“I’m very hopeful that it will be better than the down 35, but we privation to pick a prudent approach,” the CEO said about expectations for the rest of the year.
Meantime, Macy’s will take a hit from being not traveling from overseas to the U.S. and shopping at some of its stores, such as its flagship Herald Square location in New York, which are normally a frame for tourists.
Interim CFO Felicia Williams said the company expects no international tourism sales for the remainder of the year. In 2019, she guessed international tourism made up a little more than 4% of total sales, “so the impact is quite significant.”
Macy’s did say it is keep company with especially strong sales in luxury goods at Bloomingdale’s as stores reopen during the pandemic, however, in part because of the reduction in expeditions.
“Part of it is because you have a lot of domestic tourists that buy … that would go to other countries,” Gennette bring to light. Now, they’re forced to stay put and shop local, he said.
One more result of the pandemic could be Macy’s accelerating its inventory closing plans, as many retailers are doing. In February, Macy’s said it planned to close 125 stores to the next three years.
Williams said Wednesday that Macy’s is considering more closures at it assesses the “competitive aspect.” It is a matter of timing, she said.
Macy’s said it expects to report fiscal second-quarter earnings on Sept. 2.