Same-store sales growth
Macy’s (M) same-store sales grew 0.6% on an owned basis and 0.7% on an owned-plus-licensed basis in the first quarter of fiscal 2019, which ended on May 4. The quarter marked the sixth straight quarter of same-store sales growth for Macy’s. The department store chain experienced strength in the dresses, fine jewelry, men’s tailored, women’s shoes, fragrances, skincare, activewear, and kids categories. However, its sales were weak in the handbags category. Macy’s e-commerce sales grew in the double digits in the quarter.
Despite higher same-store sales, Macy’s net sales fell 0.7% YoY (year-over-year) to $5.50 billion and missed analysts’ estimate of $5.51 billion. The company’s net sales were adversely affected by store closures and a 3.1% fall in its international tourist sales.
Strategic initiatives driving improvement
Macy’s Growth50 strategy is driving the continued improvement in its store business. Under this strategy, the company has made several upgrades to 50 stores. According to the company, these 50 stores are now outpacing the same-store sales growth of the other stores in its fleet. Macy’s is expanding the upgrades it made under this strategy to 100 more stores in fiscal 2019.
Macy’s is also seeing positive results from its off-price Backstage stores. Macy’s opened 121 Backstage locations within its stores in fiscal 2018. The company opened nine Backstage locations in the first quarter, bringing the total count of Backstage locations within Macy’s stores to 174. The company also operates seven freestanding Backstage locations.
Macy’s digital business continues to be a key growth driver for it. The company’s mobile business remains its fastest-growing sales channel. Its mobile sales crossed $1 billion in fiscal 2018.
The company’s Vendor Direct program is helping it to enhance its merchandise assortment.
Macy’s continues to expect its fiscal 2019 same-store sales to rise in the range of 0.0%–1.0%. Analysts expect Macy’s net sales to fall 0.3% to $24.9 billion in fiscal 2019.