Macy’s to be ‘smaller company’ as loss to hit USD 1 billion in quarter amid lockdowns

By guest authors Melissa Fares and Aishwarya Venugopal from Reuters

Macy’s Inc (M.N) said on Thursday, May 21, 2020,  it could rack up operating losses of up to USD 1.11 billion in the first quarter, as the department store operator was forced to shut stores due to lockdowns aimed at curbing the spread of the new coronavirus.

“We anticipate that our sales recovery will be gradual and that for a period of time, we will be a smaller company,” Chief Executive Jeff Gennette said on a call with investors.

Shares were up nearly 3 % at USD 5.22 in morning trading.

The global health crisis has forced brick-and-mortar retailers to tap credit lines, lay off employees and suspend dividends and buybacks in a bid to stay afloat amid store closures.

Just this month, several retailers, including J Crew, J.C. Penney and Neiman Marcus Group, filed for bankruptcy after failing to cope with market uncertainties and mounting debt.

Macy’s, which shut all of its 775 stores on March 18, hired investment bank Lazard Ltd (LAZ.N) to explore options for bolstering its finances, Reuters reported last month.

While online sales have helped, they weren’t enough to offset losses relating to store closures, and from suits to dresses, apparel sales have been “soft,” Gennette said.

However, fine jewellery, kids and home were categories that performed better than others during the pandemic, he said.

Macy’s will continue to monitor consumer behaviour and expand its packaged food offerings and more, he said.

Macy’s expects most stores to reopen by late June, including its flagship Herald Square store, which stretches over an entire block in the heart of Manhattan in New York City.

The company expects to report more details on its preliminary first-quarter performance on June 9 and release its earnings for the period on July 1.

The largest U.S. department store operator by sales, Macy’s expects an operating loss of between USD 905 million and USD 1.11 billion in the first quarter, and sales of USD 3 billion to USD 3.03 billion, down from USD 5.50 billion a year earlier.

The loss excludes estimated pretax non-cash goodwill and asset impairment charges for the quarter.

The 161-year-old retailer started reopening stores on a state-by-state basis on May 4. As of this week, about 190 stores of Macy’s and Bloomingdale’s, a chain that belongs to Macy’s, had reopened.

www.macys.com

www.reuters.com

Czech Investor buys Stake in Macy’s & FootLocker

Czech billion investor Daniel Kretinsky has been buying up stakes in retailers, taking advantage of the massive drop in values that most have experienced during the pandemic.

On May 19, 2020, Bloomberg reported that Mr. Kretinsky had purchased a 6 % stake in Foot Locker (USA).  The company’s shares have been down nearly 30 % this year.

Earlier this month he purchased a 5 % stake in Macy’s (USA).  The retailer has lost nearly 70 % of its valuation this year.

According to local media reports, he plans to work with management and help the retailer turnaround its business.

Mr. Kretinsky has large stakes in Casino (France) and Metro (Germany).

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