Santa — and tax reform — came to Macy’s Inc. over the holidays.
The company said its comparable sales for the November/December holiday season rose 1 percent, a boost that, when combined with a lighter tax bill starting this month, prompted the company to raise its earnings guidance.
“Macy’s had a solid holiday shopping season, and we are pleased that our November/December performance resulted in positive comp sales for the period, setting us up for a positive fourth quarter,” said Jeff Gennette, chief executive officer.
“Consumers were ready to spend this season, and we delivered with solid execution, fresher inventory, a curated gift assortment and a focus on customer experience,” Gennette said. “We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms. Customers also responded well to our new loyalty program. We intend to close the fourth quarter in a good position and head into 2018 with momentum.”
For January, the final month of Macy’s fiscal year, the company will see a lower tax bill due to reforms President Trump signed just before Christmas. That will drive the company’s annual tax rate down to about 36 percent from 37 percent.
Macy’s is also heading into the New Year with plans for fewer stores and additional cost savings as it continues to adjust to systemic changes impacting all retailers in a more digital world.
The retailer said it would close 11 Macy’s stores as part of the August 2016 plan to shutter 100 doors. With these closures, the retailer will have closed 81 of the 100 stores. Since 2015 Macy’s has eliminated 124 doors.
Macy’s is also planning to cut costs through a new plan that will see staffing adjustments across the store’s organization, with locations losing headcount and others gaining. The effort will also lead to a streamlining of non-store functions as well as one-time charge of about $160 million in the fourth quarter.
Excluding charges associated with the restructuring, the impact of tax reform and a gain on the sale of its Union Square store in San Francisco, Macy’s nudged up its range for earnings per share for 2017, to $3.11 to $3.21 from the previously forecast $2.91 to $3.16.
Shares of Macy’s gained 0.8 percent to $25.52 in the opening minutes of trading on Wall Street.