Macy’s Inc. (NYSE:M) stock popped up as management reiterated that fourth-quarter results exceeded expectations on all three brands. Quarter over quarter sales performance improvements and a bounce back to profitability strengthened investor sentiments, conversely fuelling a leg higher.
The better-than-expected results came at the backdrop of solid sales in home, beauty, jewelry, and watch categories. The retailer also benefited from increased digital sales that helped it acquire more customers. Investments in digital innovation are increasingly paying off, which explains why the company is increasingly closing down stores.
Online Sales Growth
Digital sales in the fourth quarter were up 21% as the company gained 7 million new customers, with a majority of the shopping on its online platform. Given the company's investments towards enhancing online sales, it expects digital sales to top record highs of $10 billion over the next three years. A low-cost base should continue to support the bottom line.
The department store chain reported earnings per share of $0.80 a share. While down 62% from prior year's quarter, it was still better than the $0.12 a share expected by analysts. Revenue came in at $6.78 billion, topped analysts’ expectations of $6.50 billion.
While comparable-store sales did dip 17.1%, it was still better than the 21.3% dip projected by analysts. The lesser comparable store sale decline was down to strong digital sales and persistent recovery with the easing of lockdown restrictions.
Restructuring drive
The solid financial results underscore how Macy’s is doing well in its fight to shrug off stiff competition in the apparel and beauty segments. The mall-based store has been closing down its brick-and-mortar stores in the recent past, having come under pressure on more customers shopping online.
Macy intends to close down 125 stores by 2023 and cut as much as 9% of its total staff. The drive should help the company save as much as $1.5 billion. Part of the money will be invested to bolster online sales.