Despite Christmas sales that fell below expectations, Macy’s managed to exceed Wall Street projections on the top and bottom lines and announced a major management streamlining designed to save $100 million annually.
Macy’s said adjusted earnings per share for the fourth quarter came in at $2.73, above the $2.53 expected. Revenues reached $8.46 billion, down from last year’s $8.67 billion but slightly above the $8.45 billion expected. Comparable sales rose 0.7 percent, and 2 percent on a 53-week basis.
Net income dropped to $740 million from $1.34 billion.
For the year, the net income dropped to about $1.1 billion from $1.56 billion, while net sales were up slightly to $24.97 billion from $24.94 billion in the year before. Comparable sales were up 2 percent for the year.
The management streamlining involves at least 100 positions at the vice president level and higher to save $100 million annually. The company has also identified efficiencies throughout the business, but said it would “protect any customer-facing activities.”
“The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs and be more responsive to changing customer expectations,” said Jeff Gennette, chairman and chief executive officer. “Importantly, these changes build the foundation we need to achieve meaningful enterprise productivity improvements. These actions impact colleagues who have made strong contributions to the company over the years, and I thank them for their service.”
Gennette said 2018 “was an important year for Macy’s Inc. as we changed the trajectory of the company and delivered positive comparable sales for the full year. I’m pleased with the impact of our strategic initiatives, particularly as they gained traction in the back half of the year.
“Looking at the fourth quarter of 2018, while we delivered positive comparable sales against what was a strong holiday season in 2017, results were lower than our expectations. We experienced another quarter of double-digit growth in digital. We also saw continued improvement in our brick-and-mortar trends with the Growth 50 stores outperforming the fleet.
“We know that when we listen to our customers, we win. And when we invest in our business, we grow. In 2019, we will continue with a balanced investment approach, and we are confident that Macy’s Inc. is on the right path to deliver sustainable, profitable growth.
The company plans to expand its growth investment strategy to another 100 stores. The strategy involves investing more heavily in top-performing stores.
Macy’s also said it would add Backstage off-price departments to another 45 Macy’s stores this year, continue to grow its vendor direct program with more vendors and stockkeeping units, enhance the Macy’s mobile app, and invest in categories where the company feels its has strong market share and growth potential including dresses, fine jewelry, big ticket, men’s tailored clothing, women’s shoes and beauty.