Macy's outpaces expectations, guides in line; Provides restructuring update as it staves off Arkhouse bid
Macy's, the iconic American department store chain, reported Q4 earnings for the fiscal year 2024, beating analysts' estimates and providing in line guidance for the upcoming fiscal year. The company provided an update to restructuring plans which is under tight scrutiny after the company rejected a $5.8 billion dollar bid from investor group Arkhouse Management.
The stock slipped below the 20- and 50-day convergence level at the $19 area following the news. This lines up as a key level for investors to track. Investors should keep in mind the M&A potential that looms.
Macy's reported Q4 earnings of $2.45 per share, which surpassed the estimates of $1.98. The company's revenues decreased by 1.7% year-over -year to $8.12 billion, in line with estimates of $8.07 billion.
Macy's reported a 5.4% decline in comparable sales on an owned basis and a 4.2% decline on an owned-plus-licensed basis compared to expectations of a -5.7% decline.
Macy's has provided guidance for the upcoming fiscal year 2025. The company expects EPS of $2.45-2.85, which places the midpoint below analysts' estimates of $2.77. Macy's also expects revenues of $22.2-22.9 billion for FY25 , in line with estimates of $22.71 billion. Macy's expects a change in comparable sales of approximately -1.5% to +1.5% compared to 2023. This indicates a relatively stable sales performance in the upcoming fiscal year.
The company aims to strengthen its flagship Macy's brand, expand its luxury segment, and modernize its end-to -end operations. As part of this plan, Macy's plans to close approximately 150 underperforming locations by 2026, while investing in around 350 go-forward locations. Additionally, the company intends to expand its Bloomingdale's and Bluemercury footprint by up to 45 locations through 2026.
Macy's is also focused on optimizing its cost structure and improving sales efforts. The company expects better sales initiatives to result in annual run-rate savings of approximately $235 million by 2026. Macy's plans to increase automation across several facilities to reduce fulfillment costs, further driving efficiency and profitability. The company's prudent financial management is evident through its plan to monetize $600 million to $750 million of assets by 2026. This strategy enables Macy's to unlock value and strengthen its financial position.
Macy's strong Q4 earnings and guidance for FY25 indicate a promising outlook for the company. The strategic initiatives announced by Macy's are aimed at strengthening its business and maximizing shareholder value. The company's focus on growing its luxury segment, streamlining operations, and monetizing assets is a positive sign for investors seeking stable growth and profitability.
In conclusion, Macy's Q4 earnings report and guidance for FY25 reflect the company's commitment to driving growth and enhancing shareholder value. By focusing on its core strengths and implementing strategic initiatives, Macy's is well-positioned to navigate the challenges and opportunities in the retail sector.