Macy's to Slow Store Growth, Boost Interaction
March 10, 2008-- Home Textiles Today,
Department store titan Macy's Inc. will spend less on opening new stores and more on better in-store execution, online business and customer service, the retailer said during its fourth-quarter and year-end earnings call.
Net income for the year ended Feb. 2, 2008 was $893 million, down 10.2% from $995 in the prior year. Earnings per share, however, rose 8.9% to $1.97, as the number of common shares outstanding shrank by 15.5% to 419.7 million shares.
The company reported total fiscal 2007 sales of $26.3 billion, down 2.4% from $27.0 billion in fiscal 2006, which had an extra week. Comps fell 1.3%.
In the quarter, Macy's sales of $8.6 billion were 6.2% below $9.2 billion in last year's fourth quarter, which contained the extra week. On a comp basis, sales were off 2.0% in the latest period.
Chairman, president and ceo Terry Lundgren said Macy's outperformed "most of our primary competitors in the fourth quarter." He added, "Going forward, we are aggressively pursuing our recently announced market localization initiative to drive future sales and earnings."
Speaking to analysts, evp and cfo Karen Hoguet said former May Co. stores improved throughout 2007, and as a group outperformed legacy Macy's units "in some divisions" during the fourth quarter. She noted that "big ticket home," or furniture and mattresses, had a "fabulous" year due to added online presence and advertising as well as better overall execution of the assortment.
In her sole note concerning the Martha Stewart Collection, which launched chainwide prior to the fourth quarter, Hoguet called it "successful" and said consumers attracted by the "excitement" fueled traffic throughout the store.
The Martha Stewart program is part of the 19% of the merchandise mix that is exclusive to the company, and Hoguet said such private brands outperformed national brands at Macy's Inc. in 2007.
Macy's Inc. opened 10 Macy's and two Bloomingdale's during the past year — and projects just five new Macy's and no new Bloomie's in 2008, she said. Instead, the company will spend more on in-store presentation, adding staff to the selling floor, and training them better, and will continue to improve its online shopping experience.
|Qtr. 2/2 ($millions)||2007||2006||% change|
|a. 13-week fourth quarter in fiscal 2007 compared to 14-week fourth quarter in fiscal 2006.
b. 52-week fiscal 2007 compared to 53-week fiscal 2006.
|Oper. Income (EBIT)||1,222.0||1,260.0||(3.0)|
|Per share (diluted)||1.73||1.40||23.6|
|Average gross margin||41.6%||40.8%||—|
|Oper. Income (EBIT)||1,863.0||1,836.0||1.5|
|Per share (diluted)||1.97||1.81||8.9|
|Average gross margin||40.4%||39.9%||—|
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