San Diego Union-Tribune

MACY’S CLOSES TOUGH YEAR WITH HOPE OF RECOVERY IN ’21

Expects digital sales to reach $10 billion within the next three years

- BY ANNE D’INNOCENZIO D’Innocenzio writes for The Associated Press.

Macy’s is looking ahead to a year of recovery and rebuilding from the pandemic as the iconic department store chain offered annual forecasts that beat Wall Street forecasts.

Driving that optimism is Macy’s push to accelerate online sales, while focusing on physical stores at top-tier malls and modernizin­g its supplier network to speed up deliveries.

Macy’s believes annual sales will reach $20.75 billion this fiscal year, exceeding the roughly $17 billion that Wall Street had been projecting. Macy’s also expects adjusted earnings per share in the range of 40 cents to 90 cents for the year, much better than the $2.92 loss that analysts forecast, according to FactSet.

The company said on Tuesday it expects digital sales to reach $10 billion within the next three years and that the online side will become even more profitable. Still, the department store defended its physical store business, noting that online sales are two to three times higher in markets with Macy’s stores.

The forecast came as Macy’s posted a fourth-quarter profit drop of 52 percent. Sales slid nearly 19 percent. In the context of a year spent under the weight of a pandemic, that was seen as a pretty good ending to 2020 for the besieged department store.

Macy’s faced challenges even before the pandemic forced the chain and its peers to close temporaril­y last spring to reduce the spread of the virus. The retailer was wrestling with increasing competitio­n from online players like Amazon and discounter­s like

Target. But the pandemic accelerate­d shoppers’ shift to online and increased the dominance of big box stores, which were allowed to stay open because they were deemed essential.

Macy’s and other department stores are being threatenin­g on multiple levels. Target, for example, signed a deal with beauty chain Ulta late last year to put Ulta shops in 100 stores in the next few month.

Macy’s has been fighting back, while taking some bolder moves. The company has been paring back inventory, while continuing to close some stores. It also launched curbside pickup and is expanding its off-price concept BackStage, which outperform­ed a key sales metric in Macy’s stores by more than three times.

Macy’s also rapidly changed its merchandis­e mix to reflect what shoppers are embracing during a pandemic like cooking products, home and activewear among other things. But it has also introduced new items like skin care devices and baby gear.

Macy’s said that sales of beauty, home, fragrances and watches helped drive sales in the latest quarter, while career and other dress up clothes have remained in the doldrums. But it said it will be ready to increase assortment­s of dress up clothes when it sees shoppers going out more amid the vaccine rollout.

“It could have been a terrible year for Macy’s,” Jeff Gennette, Macy’s CEO, told analysts Tuesday. “Instead, we battled through the store closures and reopened to deliver unexpected wins and some promising tests.“

Gennette added that the company “learned a tremendous amount that has informed us on how to best adapt and improve our outlook.“

 ?? WILFREDO LEE AP ?? Macy’s defended its physical store business, saying online sales are two to three times higher in markets with Macy’s stores.
WILFREDO LEE AP Macy’s defended its physical store business, saying online sales are two to three times higher in markets with Macy’s stores.

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