Reopened Macy’s stores may be doing better than expected, according to the company, but first-quarter losses from the impact of COVID-19 have already ballooned to $652 million.
In preliminary results released Tuesday, Macy’s Inc. said its $652 million net loss will translate to $2.10 per diluted share, against net income of $136 million, or 44 cents, in the year-ago period. On an adjusted basis, the diluted loss per share came in at $2.03.
Net sales fell 45 percent to $3.02 billion from $5.50 billion. The preliminary results do not include non-cash impact of goodwill and long-live asset impairment charges, which Macy’s expects will have a “material impact” on the company’s reported results, which will be disclosed on July 1.
Wall Street currently expects a diluted loss per share of $2.33 on net revenue of $3.01 billion.
Macy’s started reopening stores in May, and has now reopened roughly 450 locations that were closed since mid-March, with many operating in their full format and the balance just for curbside pickup. With its e-commerce sales continuing throughout the shelter-in-place mandates that saw brick-and-mortar shuttered, Macy’s said its online sales improved in May, the start of the second quarter.
“Our strong digital business sales trend continued throughout May, and it is encouraging to see that as we reopen a store, the digital business in that geography continues to be strong,” Macy’s chairman and CEO Jeff Gennette said. “Our reopened stores are performing better than anticipated. Importantly, we are receiving positive feedback on the curbside pickup experience and our efforts to create a safe and welcoming shopping environment.”
Gennette said Macy’s is seeing strong sell-through of seasonal merchandise, and expects to exit the current quarter in a clean inventory position. “The holiday season will be crucial, and the team is working now to get the right merchandise and assortment in place,” he added.
Macy’s said in its preliminary data report that merchandise inventories were $4.92 billion at the end of the first quarter, down from $5.50 billion in the year-ago quarter. Merchandise accounts payable were $2.20 billion, up from $2.00 billion last year. Total debt increased to $5.66 billion from $4.72 last year. The company, which operates three retail brands under the Macy’s, Bloomingdale’s and Bluemercury nameplates, ended fiscal 2019 with sales of $24.6 billion.
On Monday, Macy’s reported a new round of financing totaling $4.5 billion, an amount that it had previously said will be sufficient to fund operations for the foreseeable future. The company has also tweaked its Polaris strategy, first disclosed in February, to turn its operations around post-coronavirus.