Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Macy's Inc (M, Financial) achieved a 0.2% comp gain in the fourth quarter, marking its highest in 11 quarters.
- The company realized a 71% increase in free cash flow, reaching $679 million, inclusive of asset monetization proceeds.
- Macy's Inc (M) closed 64 underperforming stores, exceeding their annual plan and contributing to asset sale gains.
- Bloomingdale's achieved a positive 6.5% comp, the strongest fourth quarter volume in its history.
- Bluemercury marked its 16th consecutive quarter of positive comps, showcasing strong performance in beauty trends.
Negative Points
- Macy's Inc (M) reported a decline in total net sales to $7.8 billion from $8.1 billion the previous year.
- The company anticipates continued pressure on consumer spending due to inflation and economic uncertainties.
- Macy's Inc (M) expects a decline in comps for 2025, projecting a range of down 2% to down 0.5%.
- The home category remains under pressure, impacted by interest rates and competitive landscape.
- SG&A expenses increased as a percentage of total revenue, reflecting lower year-over-year total revenue.
Q & A Highlights
Q: Could you walk through areas of strength relative to same-store sales constraints that you're embedding in the down 2% to down 0.5% maybe relative to initial expectations for the return to growth?
A: Antony Spring, Chairman and CEO, explained that Macy's entered 2025 stronger than 2024, with progress in store growth, closures of underproductive stores, and improvements in delivery and operations. The company is confident in its strategy but cautious about the environment, with untouched stores still posing challenges. Digital growth and Macy's Go-forward enterprise performed well in the quarter.
Q: How are you thinking about engaging various customer demographics to return to positive comps over the next few quarters?
A: Antony Spring emphasized the strength of Macy's portfolio, which includes three iconic nameplates and 40 million active customers. The company is well-positioned to navigate an uncertain environment with its multi-category business and strong partnerships. Macy's aims to leverage its strengths to engage customers across generations and adapt to market changes.
Q: Can you talk about the overall consumer health embedded in the guidance and promotional levels?
A: Antony Spring noted that consumer health remains under pressure due to inflation and other economic factors. Macy's aims to provide a compelling customer experience through newness, marketing campaigns, and partnerships. The promotional environment is expected to remain competitive, but Macy's inventory position is strong, with more newness and less aged inventory.
Q: How did Macy's Go-forward comps perform relative to expectations, and what are the category dynamics assumed throughout the year?
A: Antony Spring highlighted strong performance in ready-to-wear and women's shoes, particularly in the first 50 stores with investments. Bloomingdale's saw growth in ready-to-wear and advanced contemporary categories. The home business remains pressured, but Macy's is working on refreshing its offerings. Marketplace growth is planned for 2025, with no inventory risk.
Q: Could you provide more detail on credit trends in 4Q and any notable changes in payment rates or losses quarter-to-date?
A: Adrian Mitchell, CFO and COO, stated that credit card revenues stabilized in 2024 and are expected to grow in 2025. Initiatives to increase card usage and maintain a healthy credit portfolio have been successful, with no meaningful changes in credit trends quarter-to-date.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
