Macy’s 4Q plummets, beats consensus
February 24, 2009,
Cincinnati – Weak sales, gross margin deterioration and a slew of one-time costs related to division consolidations, rollout of the My Macy’s initiative and store closings sent Macy’s Inc. profits tumbling by 59% in the fourth quarter to $310 million, or 73 cents per diluted share. Still, that best per-share projections by 4%.
While “absolute sales performance” was poor all around, My Macy’s stores did 1.5 points better than legacy stores during the quarter, she said and Internet sales climbed 24%. However, with Wall Street shedding jobs, bonuses and businesses at a rapid rate, sales at New York City Macy’s and Bloomingdale’s stores were negative.
“Managing cash has been and will continue to be a top priority,” said Hoguet.
Looking ahead, Macy’s will also focus on excelling in sales and comp performance in its channel, improving return on investment, boosting EBITDA (earnings before income, taxes, depreciation and amortization) as a percentage of sales, maximizing capital expenditures, editing assortments and improving turn in inventory.
For the fourth quarter ended Jan. 31, sales fell 7.7% to $7.934 billion, with comps of 7.0%.
For the fiscal year, sales dropped 5.4% to $26.3 billion, with comps off 4.6%. For the year, internet sales climbed 29.0% Net income fell nearly 69% to $280 million, or 66 cents per share.
|Oper. Income (EBIT)||647||1,222||(47.1)|
|Per share (diluted) b||0.73||1.73||(57.8)|
|Average gross profit||39.3%||41.6%||—|
|Oper. Income (EBIT)||1,004||1,863||(46.1)|
|Per share (diluted)||0.66||1.97||(66.5)|
|Average gross profit||39.7%||40.4%||—|
As of Jan. 31, 2009, Macy’s Inc. had $9.125 billion of goodwill, primarily related to the 2005 acquisition of May Department Stores Company. Because of the decline of the economy and Macy’s market capitalization, the company is in the process of reviewing its goodwill for impairment.
Unusual items include $17 million in costs related to division consolidations and localization initiatives announced in February 2008, $30 million in costs associated with division consolidations and localization initiatives announced earlier this month, and $11 million in costs associated with 11 store closings announced last month for a total of $36 million after tax or 9 cents per diluted share. Non-cash asset impairment charges include $96 million related to store properties still in operation, $40 million related to store closings announced in last month, $13 million related to acquired private brand trade names and $12 million related to the company’s investment in The Knot for a total of $102 million after tax or 24 cents per diluted share.
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