Macy's results not as awful as expected
Macy's Inc. (M) today reported better-than-expected quarterly results as the retailer pared prices to the bone to lure cash-strapped shoppers.
The company had a net loss of $88 million, or 21 cents a share, compared with a loss of $59 million, or 14 cents, a year earlier. Revenue fell 9.5 percent to $5.199 billion. Excluding one-time the company lost 16 cents per share, better than recent guidance for a loss of 19 cents to 21 cents per share. Net cash used by operating activities was $35 million in the first quarter, compared with $21 million of net cash provided in the first quarter last year. Shares rose in pre-market trading, but are down about four percent at 10:30.
"We continue to successfully navigate this very difficult economic environment," said Terry J. Lundgren, Macy's chief executive officer in the earnings press release. "Our first quarter sales were consistent with our initial expectations, while earnings and cash flow performance were better than expected."
Macy's maintained its annual guidance issued in February for fiscal 2009 sales to be down between six and eight percent, and for earnings of 40 cents to 55 cents per share, excluding division consolidation costs. The company expects it will exceed this guidance if the economy improves in the second half of the year. The company expects to book approximately $230 million in division consolidation costs in the final three quarters of 2009.
Faced with consumers who are too scared about their financial futures, Macy's has had little choice but to take drastic actions. The company announced plans in earlier this year to slash 7,000 jobs to cut expenses by $400 million per year starting in 2010. It also closed 11 stores.
Macy's is looking to lure shoppers who were customers of chains that were shuttered due to the economic downturn. Whether that strategy will work remains to be seen.
Retailers are going to need to lure back shoppers to their stores. Like other companies, they can't cost cut their way to growth.