Macy’s Ends Same-Store Sales Losing Streak

Comparable sales rose 1.3% in Q4 as the retailer's renewed emphasis on apparel helped bring in more shoppers and persuaded them to spend more.
Matthew HellerFebruary 27, 2018

Macy’s on Tuesday reported quarterly same-store sales growth for the first time since the end of 2014, fueling optimism that the retailer’s turnaround efforts are paying off.

Like other retailers, Macy’s benefited from a strong holiday season as comparable sales rose 1.3% in the fourth quarter that ended on Feb. 1, well above analysts’ estimates of a 0.1% gain.

The company attributed the surge to strategic moves such as dialing back discounts, adding exclusive products, and investing in its private-label brands. It also said a renewed emphasis on apparel helped bring in more shoppers and persuaded them to spend more.

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Customers on average spent 3% more on each item they purchased during the quarter, according to CEO Jeff Gennette.

“Our customers have responded well to the increased focus on fashion and enhanced quality of the merchandise,” he said in an earnings call with analysts. “The consumer was out spending, and that was great.”

Overall fourth-quarter sales increased 1.8% to $8.67 billion while profits nearly tripled, to $1.3 billion, or $4.31 per share, from $472 million, or $1.54 per share, a year earlier. Adjusted earnings of $2.82 per share beat analysts’ estimates of $2.71.

“While Macy’s rode the strong consumer spending wave that helped retail spending soar during the holidays, the season brought the first signs that Gennette’s efforts to turn what is the largest U.S. department store operator around … may be working,” Fortune said.

As ir continues to try to win back shoppers who have defected to rivals ranging from Ulta Beauty to T.J. Maxx to Amazon.com, Macy’s on Tuesday announced a new initiative called “Growth50” that lays out the CEO’s strategy to improve business at Macy’s 600 or so stores. Same-store sales for fiscal 2017 were down 2.2% but Gennette said the company is committed to returning to growth in 2018.

“Macy’s is hot on the heels of a good fourth quarter,” Stephen Beck, managing partner at New York consultancy cg42, told The Washington Post. “But there’s still a long way to go before we see a truly healthy turnaround.”