After a solid holiday—and a late quarter gift in the form of tax reform—Macy’s returns its focus to cost cutting measures.
Macy’s reported a comp sales increase of 1 percent during November and December. The company noted its exclusive gift assortment performed well and beauty trended up. Other top categories included apparel, shoes, dresses, coats, fine jewelry, men’s tailored, children’s wear and home.
“Consumers were ready to spend this season, and we delivered with solid execution, fresher inventory, a curated gift assortment and a focus on customer experience,” Jeff Gennette, Macy’s, Inc. chief executive officer. “We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms. Customers also responded well to our new loyalty program.”
[Read more about how the holidays shook out at retail: Holiday Sales Beat Expectations, Boosted by Last-Minute Shoppers]
Based on these results, the retailer has narrowed its full year guidance. It now expects comp sales to decline between 2.4% to 2.7%. Total sales are anticipated to be down between 3.6% and 3.9% for the 53-week period.
The company raised its full year earnings guidance thanks to the federal tax reform bill, which will lower Macy’s taxes from 37 percent to 36 percent. It now expects adjusted earnings before diluted share of $3.59 to $3.69 in 2017. It will also gain a one-time, non-cash benefit from the reduction in tax rate from 35 percent to 21 percent in the $550 million to $650 million range.
In an effort to improve efficiency, the company said it would close 11 stores, bringing the number of scheduled closures announced in August 2016 to 81. Macy’s will close 19 more doors as leases expire or locations are sold. In total, the retailer has closed 124 stores since 2015.
The retailer is also adjusting staffing levels and streamlining non-store functions.
Overall, Macy’s expects to see annual expense savings of $300 million this year, which it will reinvest in the business. Additionally, the retail group anticipates one-time charges of $160 million related to store closings, asset impairment and restructuring booked to the fourth quarter of 2017.
“A healthy store base combined with robust digital capabilities is Macy’s recipe for success,” Gennette said. “Looking ahead to 2018, we are focused on continuous improvement and will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth.”