Macy’s Inc., entering a year of massive restructuring, reported net income of $340 million for the fourth quarter ended Feb. 1, a steep drop from the $740 million earned in the 2018 fourth quarter.
The retailer said it pulled off a good fourth quarter, saw momentum in the 10 days before Christmas and has entered 2020 with clean inventories.
Sales reached $8.34 billion in the latest quarter, slightly less than the $8.46 billion in the 2018 quarter. Comparable sales were down 0.5 percent.
For 2019 overall, net income was $564 million versus $1.11 billion in 2018. Sales were $24.56 billion versus $24.97 billion.
“Taken as a whole, 2019 did not play out as we intended for Macy’s Inc. [But] we executed well during the holiday 2019 season,” said Jeff Gennette, chairman and chief executive officer. “We were pleased with the significant trend improvement in the fourth quarter, including a meaningful sales increase uptick in the 10 shopping days before Christmas. Together with disciplined expense management, our solid sales results in the fourth quarter allowed us to deliver stronger than expected earnings results. Importantly, we ended the year in a clean inventory position.”
On Feb 4, Macy’s Inc. revealed a dramatic, massive restructuring and three-year strategy called “Polaris.” It involves closing 125 stores, or roughly a quarter of the department store in fleet, cutting about 2,000 workers corporate and support staff, and shutting its dot-com headquarters in San Francisco and its corporate offices in Cincinnati.
Macy’s dot-com headquarters in San Francisco will close and relocate to New York City. Some technology positions will be added to the retailer’s Johns Creek, Ga., facility, and an office in Atlanta will serve as the primary technology hub for the company.
Macy’s has long been saddled with many weak stores, to a large degree stemming from its acquisition of May Co. in 2005, but the business has also been hurt by stronger competitors, and by not innovating fast enough and in a big enough way to keep up with rapidly shifting consumer spending habits. The Polaris strategy, calls for growing Macy’s top four private brands into $1 billion “power” private brands, redesigning the fulfillment network with the aim of improving inventory productivity through increased sell-throughs and lower markdown rates, continuing to invest in web sites, mobile apps and stores operating in the best malls, expanding the Backstage off-price concept, exploring new off-mall formats and enhancing the Macy’s Star Rewards loyalty program.