Macy’s (NYSE:M) preliminary first-quarter results were announced today. The results reflected the impact of COVID-19 on retailers. The upscale department store chain expects sales between $3.0 billion and $3.03 billion in the first quarter of fiscal 2020, which ended on May 2. The company’s forecast indicates a 45% YoY (year-over-year) decline compared to net sales of $5.5 billion in the first quarter of fiscal 2019.
Despite the gloomy prediction, Macy’s stock was up about 3.0% as of 11:00 AM ET today. Investors reacted positively to Macy’s CEO Jeff Gennette’s update that customer demand has been moderately higher than anticipated at reopened stores.
COVID-19 drags down Macy’s Q1 sales
Macy’s first-quarter estimated sales reflect the significant impact of temporary store closures on March and April sales. The company’s February sales were in line with its expectations. Macy’s closed all of its stores under the Macy’s, Bloomingdale’s, and Bluemercury brands on March 18.
Meanwhile, the company experienced a spike in its digital sales in April as customers continued to shop online. However, the company’s digital sales weren’t enough to offset the loss of sales from its strong store network.
Macy’s expects to report an operating loss of $905 million–$1.11 billion in the first quarter. The company expects to end the first quarter with cash and cash equivalents of $1.52 billion. Meanwhile, the company’s total debt is estimated to come in at $5.66 billion at the end of the first quarter of fiscal 2020 compared to $4.72 billion at the end of the first quarter of fiscal 2019.
Trying to get back on track
Macy’s has been gradually reopening its stores since May 4. Currently, the department store chain has opened about 190 Macy’s and Bloomingdale stores. The company plans to open 80 additional Macy’s brand stores for Memorial Day weekend. Overall, Macy’s expects most of its stores to open by late June. The company expects a gradual recovery in its business.
However, Macy’s and its peers struggled to grow before the COVID-19 crisis. The rising strength of online retailers like Amazon (NASDAQ:AMZN) and intense competition from off-price players TJX Companies and Ross Stores have been impacting department stores.
Macy’s has been investing in its e-commerce channels to address the growing digital sales. The company has also been expanding the presence of its off-price Backstage stores. However, despite the strategic initiatives, the company’s fiscal 2019 net sales declined 1.6% to $24.6 billion.
Macy’s expects to report its first-quarter results on July 1. The delay in results was triggered by the uncertainty amid the pandemic. Macy’s stock has fallen 70.2% as of May 20. Kohl’s (NYSE:KSS) and Nordstrom (NYSE:JWN) stocks have declined 67.2% and 63.1%, respectively, this year.
J.Crew, Neiman Marcus, and JCPenney have filed for bankruptcy. The pandemic has made the situation worse for retailers. Kohl’s reported disappointing first-quarter results on May 19, which reflect the impact of the pandemic. To learn more, read Kohl’s Q1 Results: Doom for Retailers amid COVID-19.