Macy’s upbeat after results top industry forecast

Macy’s offered an upbeat outlook Tuesday after reporting strong quarterly results that exceeded Wall Street estimates despite a slew of challenges from inflation to supply chain clogs.

The New York company also said it would not spin off its ecommerce division from its Macy’s and Bloomingdale’s stores, rejecting a push from activist investor

Jana to separate the businesses to create better value, similar to what Saks Fifth Avenue did early last year. The decision followed a comprehensive review, Macy’s said.

Like other retailers, Macy’s faces rising costs for everything from labor to shipping as supply chain backups hit companies worldwide during the holidays. This past holiday quarter also offered an extra challenge: a contagious new variant, omicron, that made some customers nervous about going into stores. It also forced many workers to take sick leave, resulting in surging costs for companies having to hire more workers beyond what was planned to fill that gap.

In November, Macy’s said it would a pay minimum of $15 per hour for new and current workers by May. But Macy’s said it navigated supply chain shortages by working with suppliers and placing bets on such products as fragrances, fine jewelry, home decor, toys, and sleepwear, all areas that performed well in the fourth quarter. Macy’s CEO Jeff Gennette told analysts Tuesday that sales of dressy clothing are improving but it’s still not back to pre-pandemic levels.

Macy’s executives also noted it’s looking at where it can raise prices. In the opening prices for mattress or sofas, for example, something that might have been $500 might have had to be priced at $549 or $599 to make the same profit margin. But, in those cases, the customer pushed back.