Softening demand hurt Macy’s first quarter as conversion rate suffered, but key home categories experienced a rebound.
Net income was $155 million, or 56 cents per diluted share, versus $286 million, or 98 cents per diluted share, in the year-prior quarter, the company reported Adjusted for one-time events, net income was $157 million, or 56 cents per diluted share, versus $315 million, or $1.08 per diluted share, in the period a year earlier.
A Yahoo Finance-published analyst consensus estimate called for earnings per adjusted diluted share of 45 cents and revenues of $5.04 billion.
Comparable sales in the quarter slid 7.9% on an owned-store basis and 7.2% on an owned-plus-licensed basis year over year. Macy’s banner comps declined 8.7% on an owned basis and 7.9%, on an owned-plus-licensed basis. Bloomingdale’s comps slipped 3.9% on an owned and 4.3% on an owned-plus-licensed basis. Bluemercury comps gained 4.3% on an owned basis versus the year-past period, the company maintained.
Macy’s best performances in the quarter came in beauty, fragrances, men’s tailored apparel, women’s career sportswear and off-price goods. Bloomingdales’ top segments were fragrances, women’s and men’s contemporary apparel, housewares and outlet locations. Best for Bluemercury were clinical and medical skincare and color categories.
Net sales were $5 billion, down 7% versus the year-before quarter with brick-and-mortar sales down 6% and digital sales down 8% versus the 2022 quarter, Macy’s stated. Total revenue was $5.17 billion versus $5.57 in the 2022 period. Operating income was $244 million versus $463 million in the year-previous quarter.
In a first-quarter conference call, Jeff Gennette, Macy’s chairman and CEO, said demand trends began to worsen in mid-March and became even tougher in April. Consumers cut discretionary spending, particularly at Macy’s, reallocating dollars to food, essentials and services. The cool weather, the banking crisis and layoffs in some key sectors all pressured shopper spending. Store traffic was healthy, but conversion lagged. Beauty, women’s sportswear and men’s tailored were strong and off-price store-within-store operations outperformed full-line stores that host them.
He added that Macy’s had experienced “a comeback in certain pandemic categories including textiles, housewares and top-of-table, which is encouraging.”
In announcing the financial results, Gennette said, “During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, strength of our inventory management and operational efficiencies. We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories. We have moved quickly to take the appropriate actions to meet current consumer demand and manage our expenses. Our revised guidance reflects incremental clearance markdowns to address excess spring seasonal merchandise in the second quarter, along with adjustments to the category composition and inventory levels in the back half of the year. Supported by our solid foundation of financial health, we remain focused on strengthening our core business and advancing our five growth vectors, which we believe will drive sustainable and profitable sales growth in the future.”