Macy’s upbeat on future despite dismal 2020 sales
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Macy’s is looking ahead to a year of recovery and rebuilding from the coronavirus pandemic as the iconic department store chain offered annual forecasts that beat Wall Street forecasts.
Driving that optimism is Macy’s push to accelerate online sales, while focusing on physical stores at top-tier malls and modernizing its supplier network to speed up deliveries.
As a result, Macy’s believes annual sales will reach US$20.75 billion this fiscal year, exceeding the roughly US$17 billion that Wall Street had projected. Macy’s also expects adjusted earnings per share in the range of 40 US cents to 90 US cents for the year, much better than the US$2.92 loss that analysts forecast, according to FactSet.
The company said on Tuesday it expects digital sales to reach US$10 billion within the next three years and that the online side will become even more profitable. Still, it store defended its physical store business, noting that online sales are two to three times higher in markets with Macy’s stores.
The forecast came as Macy’s posted a fourth-quarter profit drop of 52 percent. Sales slid nearly 19 percent. In the context of a year spent under the weight of a pandemic, that was seen as a pretty good ending to 2020 for the besieged department store.
Macy’s faced challenges even before the pandemic forced the chain and its peers to close temporarily last spring to reduce the spread of the virus. The retailer was wrestling with increasing competition from online players like Amazon and discounters like Target and Walmart. But the pandemic accelerated shoppers’ shift to online spending and increased the dominance of big box stores, which were allowed to stay open because they were deemed essential.
Macy’s and other department stores are being threatened on multiple levels. Target, for example, signed a deal with beauty chain Ulta late last year to put Ulta shops in 100 stores in the next few months.
Macy’s has been fighting back, while taking some bolder moves. The company has been paring back inventory, while continuing to close some stores. It also launched curbside pickup and is expanding its off-price concept BackStage, which outperformed a key sales metric in Macy’s stores by more than three times.
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