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Macy's (M) Q1 Loss Narrower Than Expected, Revenues Miss
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The coronavirus-induced stay-at-home orders, social distancing and store closures adversely impacted Macy’s, Inc. (M - Free Report) first-quarter fiscal 2020 performance. The New York-based company posted a loss for the quarter under review. Also, the company’s top line missed the Zacks Consensus Estimate and fell sharply from the year-ago period.
We note that this Zacks Rank #3 (Hold) stock has decreased 58.4% compared with the industry's decline of 58.6% in the past six months.
Let’s Delve Deep
Macy’s reported adjusted loss of $2.03 per share, narrower than the Zacks Consensus Estimate of loss of $2.37. Notably, the company had posted adjusted earnings of 44 cents a share in the year-ago period. Lower net sales hurt the company’s bottom line.
Net sales of $3,017 million fell short of the Zacks Consensus Estimate of $3,028 million, after surpassing the same in the preceding quarter. We note that the top line declined 45.2% on a year-over-year basis. Also, gross margin contracted to 17.1% during the quarter discussion from 38.2% in the year-ago period.
Macy’s reported adjusted EBITDA loss of $689 million. The company had reported adjusted EBITDA of $447 million in the year-ago quarter.
Macy’s ended the first quarter with cash and cash equivalents of $1,523 million, which portrays a sharp rise from cash and cash equivalents of $685 at the end of the preceding quarter. We note that the company ended the quarter with a total debt of $5,657 million, which shows a sequential increase of almost 36%. Shareholders’ equity was $2,697 million as of May 2.
Key Notes
Management highlighted that almost all of the company's outlets have now reopened, including those in the major metropolitan areas. Notably the reopened stores have been performing above expectations. Also, the company's digital business remained robust across geographies. As a result, the company anticipates a steady recovery in sales. Undoubtedly, the company has been concentrating on improving financial flexibility and taking adequate steps to stabilize the business.
The company recently announced restructuring updates, including cost-containment measures and headcount reductions to address challenges related to the pandemic and position itself for future success.
The retailer informed that it will eliminate nearly 3,900 corporate and management jobs. The company’s actions will result in cost savings of roughly $365 million in fiscal 2020 and about $630 million on an annualized basis. The aforementioned savings is in addition to $1.5-billion annual cost savings announced in February, which is anticipated to be accomplished by 2022 end.
Macy’s also stated that it will turn into a smaller company going forward. Its lower cost base, coupled with about $4.5-billion new financing, will help it become more stable and flexible.
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SpartanNash Company (SPTN - Free Report) has a trailing four-quarter positive earnings surprise of 17.1%, on average. It carries a Zacks Rank #1.
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Macy's (M) Q1 Loss Narrower Than Expected, Revenues Miss
The coronavirus-induced stay-at-home orders, social distancing and store closures adversely impacted Macy’s, Inc. (M - Free Report) first-quarter fiscal 2020 performance. The New York-based company posted a loss for the quarter under review. Also, the company’s top line missed the Zacks Consensus Estimate and fell sharply from the year-ago period.
We note that this Zacks Rank #3 (Hold) stock has decreased 58.4% compared with the industry's decline of 58.6% in the past six months.
Let’s Delve Deep
Macy’s reported adjusted loss of $2.03 per share, narrower than the Zacks Consensus Estimate of loss of $2.37. Notably, the company had posted adjusted earnings of 44 cents a share in the year-ago period. Lower net sales hurt the company’s bottom line.
Net sales of $3,017 million fell short of the Zacks Consensus Estimate of $3,028 million, after surpassing the same in the preceding quarter. We note that the top line declined 45.2% on a year-over-year basis. Also, gross margin contracted to 17.1% during the quarter discussion from 38.2% in the year-ago period.
Macy’s reported adjusted EBITDA loss of $689 million. The company had reported adjusted EBITDA of $447 million in the year-ago quarter.
Macys, Inc. Price, Consensus and EPS Surprise
Macys, Inc. price-consensus-eps-surprise-chart | Macys, Inc. Quote
Other Financial Aspects
Macy’s ended the first quarter with cash and cash equivalents of $1,523 million, which portrays a sharp rise from cash and cash equivalents of $685 at the end of the preceding quarter. We note that the company ended the quarter with a total debt of $5,657 million, which shows a sequential increase of almost 36%. Shareholders’ equity was $2,697 million as of May 2.
Key Notes
Management highlighted that almost all of the company's outlets have now reopened, including those in the major metropolitan areas. Notably the reopened stores have been performing above expectations. Also, the company's digital business remained robust across geographies. As a result, the company anticipates a steady recovery in sales. Undoubtedly, the company has been concentrating on improving financial flexibility and taking adequate steps to stabilize the business.
The company recently announced restructuring updates, including cost-containment measures and headcount reductions to address challenges related to the pandemic and position itself for future success.
The retailer informed that it will eliminate nearly 3,900 corporate and management jobs. The company’s actions will result in cost savings of roughly $365 million in fiscal 2020 and about $630 million on an annualized basis. The aforementioned savings is in addition to $1.5-billion annual cost savings announced in February, which is anticipated to be accomplished by 2022 end.
Macy’s also stated that it will turn into a smaller company going forward. Its lower cost base, coupled with about $4.5-billion new financing, will help it become more stable and flexible.
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Big Lots (BIG - Free Report) , a Zacks Rank #1 (Strong Buy) stock, has a trailing four-quarter positive earnings surprise of 62.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dollar General (DG - Free Report) has a long-term earnings growth rate of 12.4%. Currently, it sports a Zacks Rank #1.
SpartanNash Company (SPTN - Free Report) has a trailing four-quarter positive earnings surprise of 17.1%, on average. It carries a Zacks Rank #1.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>