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What Macy’s Fiscal 2019 Sales Guidance Reflects

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Sales growth in fiscal 2018

Macy’s (M) net sales grew 0.1% to ~$25.0 billion in fiscal 2018 (ended February 2). The company’s same-store sales grew 2.0% on an owned-plus-licensed basis. This growth came after three consecutive fiscal years of lower same-store sales as Macy’s and its peers struggled to compete with online retailers. In fiscal 2018’s fourth quarter, Macy’s sales fell 2.5% to $8.46 billion but exceeded analysts’ expectation of $8.45 billion.

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What impacted Macy’s Q4 sales

Macy’s fourth-quarter sales were impacted by a fire at its West Virginia fulfillment center in November and its decision to restrict its pre-Christmas earn-and-redeem event to Star Rewards loyalty program members. Also, the company’s international tourist sales fell.

Macy’s same-store sales grew 0.4% on an owned basis and 0.7% on an owned-plus-licensed basis in the fourth quarter. The company’s fragrance, skin care, women’s shoes, activewear, fine jewelry, men’s tailored clothing, and furniture categories performed well. However, women’s sportswear, handbags, and color cosmetics failed to impress in the fiscal fourth quarter.

Fiscal 2019 guidance

Year-over-year, Macy’s expects its net sales to be flat in fiscal 2019. The company expects same-store sales growth (on an owned-plus-licensed basis) of 0.0%–1.0%, which indicates a slowdown from fiscal 2018.

Macy’s guidance reflects the turmoil in the department store sector, which is struggling amid rising competition from online and off-price players. The uncertain macro environment also raises concerns about Macy’s and its peers’ growth prospects. Next, let’s look at Macy’s margins.

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