Macy’s Inc. Reports Strong 3rd Quarter, Lifts Outlook for Year

Macy’s Inc., lifted by strong sales performances across all of its divisions, reported net income of $239 million, or 78 cents a share, for the third quarter, compared to a loss of $91 million or 29 cents, in the year-ago period.

Total sales for the quarter ended Oct. 30 rose to $5.44 billion, compared to $3.99 billion in the year ago period. Comparable sales were up 35.6 percent versus the 2020 period and 8.7 percent versus the 2019 period. Part of the sales lifts was due to earlier holiday shopping and Macy’s running a friends and family promotion in the third quarter, instead of the fourth quarter.

Digital sales increased 19 percent versus third quarter 2020 and grew 49 percent versus third quarter 2019.

“Macy’s Inc. delivered another strong quarter, and exceeded its expectations on both top and bottom lines,” said Jeff Gennette, chairman and chief executive officer. “The results were driven by the effective execution of the Polaris strategy and an improved economic environment.” Polaris is Macy’s three-year strategy, unveiled in February 2020, centering on personalization and the loyalty program, expanding assortments, accelerating digital growth, closing 125 department stores, opening smaller scale off-mall stores, boosting some private brands into billion-dollar businesses, and reducing costs.

Gennette said that in the third quarter, the Macy’s brand added 4.4 million new customers. “Consumers continue to spend, and we successfully offered a wide range of expanding merchandise assortment to meet their growing demand,” he said.

“Looking ahead to the fourth quarter, we remain a special place for holiday shopping, and our robust omnichannel ecosystem is showing resilience in the face of labor and supply chain challenges and enables us to meet customer shopping needs with speed and convenience.”

The company unveiled plans to launch a digital marketplace in the second half of 2022 to “further fuel customer acquisition and sales growth across all of our channels,” Gennette said.

“Our digital business is targeted to generate $10 billion in sales by 2023, and we expect the new marketplace platform to produce incremental revenue on top of that target,” said Matt Baer, chief digital and customer officer at Macy’s Inc. “The marketplace platform will enable us to expand our assortment at a low incremental cost, while giving Macy’s customers easy access to even more product selection to meet their diverse needs.”

The retailer is partnering with Mirakl, which powers many retail marketplaces with its platform. Macy’s said Mirakl will “seamlessly integrate into Macy’s and Bloomingdale’s architecture and allow for evolving strategies over time.”

By division, Macy’s comparable sales rose 35.1. percent from the year-ago quarter and 8.4 percent from the 2019 period, fueled by categories that were “solid” throughout the pandemic, including home, fragrances, jewelry, watches and sleepwear. Occasion-based categories, such as dresses, men’s tailored and luggage, continued to recover, and emerging categories, such as toys and pets, showed “encouraging results and the company continues to expand on those categories and related brands.”

Bloomingdale’s comparable sales were up 38.5 percent compared to the third quarter of 2020 and ahead 11.2 percent compared to the 2019 period. Results were driven by strong sales of luxury handbags, fine jewelry, home, men’s shoes, and contemporary apparel.

Bluemercury comparable sales were up 39.5 percent compared to the third quarter of 2020, but down 2.2 percent compared to the third quarter of 2019. Private brands, home fragrance and treatment showed strong sales performance during the quarter.

Gross margin for the quarter was 41 percent up from 35.6 percent in third quarter 2020 and up 100 basis points from the 2019 quarter. Improvements were largely due to benefits from pricing, promotion and inventory productivity enhanced by the Polaris strategy.

Macy’s raised its full year guidance. Net sales are seen reaching $24.12 billion to $24.28 billion, versus previous guidance of $23.55 billion to $23.95 billion. Adjusted diluted earnings per share are seen at $4.57 to $4.76, compared to the previous guidance of $3.41 to $3.75.

Originally posted on November 18, 2021, by David Moin, WWD