\nMacy\u2019s, Inc. (NYSE: M) today reported financial results for the first quarter of 2023 and updated its annual guidance.<\/p>\n
\n\u201cDuring 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,\u201d said Jeff Gennette, chairman and chief executive officer of Macy\u2019s, Inc.<\/p>\n
\n\u201cWe 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 \u2013 which we believe will drive sustainable and profitable sales growth in the future,\u201d continued Gennette.<\/p>\n
First Quarter Highlights<\/b><\/p>\n
\nComparisons are to the first quarter of 2022 unless noted otherwise. Comparisons to 2019 are provided, where appropriate, to benchmark performance. Please refer to note 2 within the financial tables regarding reclassifications of certain prior year metrics.<\/p>\n
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- Diluted earnings per share of $0.56 and Adjusted diluted earnings per share of $0.56.<\/b>\n
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- \nThis compares to diluted earnings per share of $0.98 and Adjusted diluted earnings per share of $1.08 in the first quarter of 2022.
\n<\/li>\n<\/ul>\n<\/li>\n - Net sales of $5 billion, down 7% versus the first quarter of 2022.<\/b>\n
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- \nBrick-and-mortar sales decreased 6% versus the first quarter of 2022.<\/p>\n<\/li>\n
- \nDigital sales decreased 8% versus the first quarter of 2022.
\n<\/li>\n<\/ul>\n<\/li>\n - Comparable sales down 7.9% on an owned basis and down 7.2% on an owned-plus-licensed basis.
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<\/b><\/li>\n- Highlights of the company’s nameplates include:<\/b>\n
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- Macy\u2019s comparable sales were down 8.7% on an owned basis and down 7.9%, on an owned-plus-licensed basis.<\/b>\n
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- \n42.2 million active customers shopped the Macy\u2019s brand, on a trailing twelve-month basis.<\/p>\n<\/li>\n
- \nStar Rewards program members made up approximately 70% of Macy’s brand comparable owned-plus-licensed sales on a trailing twelve-month basis, up approximately 1 percentage point versus the prior year.<\/p>\n<\/li>\n
- \nThe nameplate saw strength in beauty, particularly fragrances, men\u2019s tailored, women\u2019s career sportswear and off-price with Backstage.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n
- Bloomingdale\u2019s comparable sales on an owned basis were down 3.9% and on an owned-plus-licensed basis were down 4.3%.<\/b>\n
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- \n4.1 million active customers shopped the Bloomingdale\u2019s brand, on a trailing twelve-month basis.<\/p>\n<\/li>\n
- \nThe nameplate saw strength across beauty, particularly fragrances, women\u2019s and men\u2019s contemporary apparel, housewares and the outlet locations.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n
- Bluemercury comparable sales were up 4.3% on an owned basis.<\/b>\n
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- \nApproximately 676,000 active customers shopped the Bluemercury brand, on a trailing twelve-month basis.<\/p>\n<\/li>\n
- \nThe nameplate saw strength in the clinical and medical skincare and color categories during the quarter.
\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n - Other revenue of $191 million, a $26 million decrease.<\/b>\n
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- \nRepresented 3.8% of net sales, down from 4.1% in the prior year period.<\/p>\n<\/li>\n
- \nPerformance driven largely by credit card revenue net which reflected the impact of higher bad debt within the portfolio.
\n<\/li>\n<\/ul>\n<\/li>\n - Inventory turnover, on a trailing twelve-month basis, was down 2% to 2022 and up 14% to 2019.<\/b>\n
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- \nMerchandise inventories were down 7% year-over-year and down 16% to 2019, reflecting ongoing disciplined inventory management.<\/p>\n<\/li>\n
- \nThe company is taking pricing actions in the second quarter to sell through remaining first-quarter seasonal merchandise inventories and May receipts at the Macy\u2019s nameplate, and anticipates end of second-quarter merchandise inventories to be down low to mid-single digits compared to last year on a percentage basis.
\n<\/li>\n<\/ul>\n<\/li>\n - Gross margin rate for the quarter was 40.0%, up from 39.6% in the first quarter of 2022. Versus the first quarter of 2019, gross margin rate increased 180 basis points from 38.2%.<\/b>\n
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- \nMerchandise margin was flat, benefiting from lean beginning-of-year inventory levels and lower clearance markdowns, offset by promotions and category mix shifts. Compared to the first quarter of 2019, merchandise margin improved 310 basis points primarily as a result of lower markdowns and promotions.<\/p>\n<\/li>\n
- \nDelivery expense as a percent of net sales was 40 basis points better than the prior year primarily due to improvements in our contracted carrier rates, reductions in packages per order, and a 1-percentage point decline in digital penetration year-over year. Compared to the first quarter of 2019, delivery expense as a percent of net sales was 130 bps higher primarily due to increased digital penetration and higher fuel costs.
\n<\/li>\n<\/ul>\n<\/li>\n - Selling, general and administrative (\u201cSG&A\u201d) expense of $2.0 billion, a $45 million increase.<\/b>\n
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- \nSG&A expense as a percent of total revenue was 37.7%, 350 basis points higher compared to the first quarter of 2022.<\/p>\n<\/li>\n
- \nThe increase in minimum wage for stores colleagues was fully implemented on May 1, 2022. The year-over-year dollar and rate growth includes the impact of these increases.<\/p>\n<\/li>\n
- \nSG&A expense also includes continued investments in colleagues across competitive pay, incentives and benefits.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Financial Highlights<\/b><\/p>\n
- Highlights of the company’s nameplates include:<\/b>\n
- \nThis compares to diluted earnings per share of $0.98 and Adjusted diluted earnings per share of $1.08 in the first quarter of 2022.
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