Higher holiday spending brings temporary relief to Macy's
After a dismal 2017 with 100 store closures, Macy's reported an increase in December's comparable sales with higher holiday spending, boosted by exclusive products; activewear and beauty.
December comparable sales were up 1 percent over last year across all Macy's channels including Macy’s, Macy’s Backstage, Bloomingdale’s, Bloomingdale’s The Outlet and Bluemercury.
Macy’s, Inc. CEO Jeff Gennette said customers were ‘ready to spend’ this holiday season, pointing to Macy's new loyalty program as a source of increased sales. "We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms," Gennette said.
Top categories that drove increased holiday sales were active apparel, shoes, dresses, coats, fine jewelry, men’s tailored clothing, children's and home. Exclusive gifts and beauty items were top performing products. Within the beauty category, fragrances; prestige skincare; and cosmetic gifting drove sales.
The company also announced that it has raised its earnings guidance due to a one point drop in its tax rate from 37 percent to 36 percent. While it still is anticipating sales declines for 2018, it expects the declines to be less extreme than initially forecast.
The company is now looking to digital to transform its sales figures. "A healthy store base combined with robust digital capabilities is Macy’s recipe for success," Gennette explained, adding that in 2018, the department store chain will be "focused on continuous improvement and [we] will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth.”
As part of the reorganisation, Macy's has said it will close an additional 11 stores in early 2018. Including the upcoming 11 closures, the company will have closed 124 stores since 2015. These closures will save the company $300 million in annualized expenses which Macy's plans to reinvest in the business.
On the subject of the newly introduced US corporate federal tax rate reduction, the company said that the reduction from 35 percent to 21 percent will result in a non-cash tax benefit of approximately $550 million to $650 million. This source of additional income is not included in the earnings guidance.
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