News
Drops Expected as Management Evaluates a Takeover Offer
Macy’s (M) is expected to release its first-quarter earnings report, with a buyout offer in the background.
On Tuesday morning, the department store chain is expected to report revenue of $4.81 billion – a 3.43% decline from last year – and adjusted earnings per share of $0.14.
This is the first quarterly report since CEO Tony Spring, who took the helm earlier this year, launched his new strategy, “A Bold New Chapter.”
The strategy includes plans to close 150 underperforming stores, focusing its resources on improving existing stores and product assortment, and investing in digital sales.
The plan is “designed to create a more modern Macy’s, Inc. that is expected to generate significant value for our shareholders in the coming years,” Spring said in a statement following the company’s fourth-quarter results.
Guests attend the 2024 Macy’s Flower Show at Macys Herald Square on March 24, 2024 in New York City. (Noam Galai/Getty Images for Macy’s, Inc.) (Noam Galai via Getty Images)
UBS analyst Jay Sole said the new initiatives were “unlikely” to make a difference.
In a note to clients, Sole wrote: “These initiatives are not part of our base case. However, they are part of our positive case.” He identified the three key areas as “Macy’s Backstage, Macy’s small store initiative and its omnichannel service improvements, both online and in-store.”
Since 2012, Macy’s has lost 25% of its market share “primarily to off-price retailers, brands and Amazon,” according to Sole.
The company’s same-store sales are expected to decline 2.78% year over year, a smaller drop than the 7.3% decline seen in the first quarter of 2023.
CFRA analyst Zachary Warring expects sales to continue falling, “with a single-digit decline over the next five years,” he wrote in a client note.
It’s unclear whether the company will provide updates on Arkhouse Management and its partner Brigade’s $6.6 billion bid to take the department network private. In mid-March, they both said on a SEC Filing that they were working on a confidentiality agreement with Macy’s that would allow buyers to perform financial due diligence.
The Earnings Summary
Here’s what Wall Street expects from Macy’s, according to Bloomberg data, compared to Q1 2023 results:
-
Liquid sales: $4.81 billion compared to $4.98 billion a year ago
-
Adjusted EPS: $0.14 compared to $0.56 a year ago
-
Same-store sales: -2.78% compared to -7.20% a year ago
-
Gross margin: 39.63% compared to 40.00% a year ago
-
Adjusted net profit: $39.6 million compared to $157 million a year ago
–
Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or send an email to bdipalma@yahoofinance.com.
Click here for all the latest retail stock news and events to better inform your investment strategy