Macy's CEO says physical stores important to retail's future
Macy’s remains committed to its retail locations. Terry Lundgren, CEO, said in a conference call with analysts on Tuesday following the release of its fourth quarter results, “Physical stores will play an exceedingly important role in the future of shopping for us and others,” and he added that 90% of Macy’s and Bloomindale’s products are sold in physical stores.
Lundgren has no doubt that the retail environment will remain challenging into 2017, but he feels that “[there are] enough customers in the mall, it's just a matter of where they are shopping."
Macy’s reported a 2.9% decline in comparable store sales and diluted earnings per share of $3.11, which Lundgren “thought we could have done better than that, particularly in the fourth quarter,” and commented the year did not perform as expected. The retailer also reported better-than-expected quarterly profit.
E-commerce performed well for the retailer, posting double-digit growth, but Macy’s has no intention of shifting focus from its physical stores. Lundgren added that the retailer will work closely with the real estate team “and expect[s] to get a lot done in 2017.” The Macy’s Backstage concept has also made stores much more productive, and the retailer will continue to work on refining the format.
Macy’s achieved a profit increase in the fourth quarter due to its store closures and deals. The retailer sold 66 stores in 2016 and announced plans to close 34 stores. The Macy’s Union Square men’s store building in San Francisco was also sold for $250 million. In addition, Macy’s real estate deals reduced costs and taxes.
Karen Hoguet, Macy’s CFO, did not address rumors of a potential sale, but she said the company is aware of the recent headlines. Hudson’s Bay Company in February was named as one of the companies seeking to acquire Macy’s.
Net sales for the quarter fell 4% to $8.52 billion, the eighth consecutive quarterly sales decline, and net income attributable to shareholders fell to $475 million, or $1.54 per share, from $544 million, or $1.73 per share. Macy’s expects comparable sales to fall between 2% and 3% for the fiscal year ended January 2018.
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