NEW YORK — R.H. Macy & Co. sharply cut its operating loss in the five weeks ended April 2 and nearly tripled its earnings before interest, taxes, depreciation and amortization (EBITDA).
Myron E. Ullman, Macy’s chairman and chief executive officer, said the “ongoing success in strengthening margins and reducing expenses” helped the company exceed plan for the period.
However, analysts warned that the early Easter may have artificially pumped up sales and margins for this past March. A better indication of the underlying business will come when March and April results are combined.
On the plus side, one analyst noted, “Macy’s picked up $18 million in cash flow in February and March and seems to be approaching normalized cash flow at a faster pace than I previously thought they could.”
EBITDA, the best indicator of a company’s
financial performance in Chapter 11, increased to $28.6 million, 20 percent over internal projections, from $10.4 million last year.
Macy’s operating loss in the month narrowed to $5 million from $17.8 million a year ago.
As expected, Macy’s experienced robust comparable-store sales gains of 14.6 percent, due to the early Easter — April 3 this year against April 11 a year ago. Last year’s later Easter pushed holiday sales into April.
Total sales increased 6.7 percent to $538.9 million from $504.9 million last year.
The firm said sales were particularly strong in Los Angeles, New York, San Diego and Philadelphia.
The net loss in March fell to $62.3 million, including a one-time $35 million charge related to losses that were associated with the January 1994 Los Angeles earthquake. Last year, the net loss was $148.5 million, including a $105.8 million reserve for closing stores.
With the stronger margins, Macy’s reported $76.6 million in cash on hand as of April 2 — $60 million more than anticipated. Coupled with $474.3 million of available bank lines, the retailer had a total working capital availability of $550.9 million.
Based on current projections, Macy’s does not expect to borrow from its $550 million credit facility at all this spring.
Meanwhile, Macy’s bonds edged up slightly following the retailer’s revised reorganization proposal unveiled Friday. Under the proposal, senior bondholders are the only group of bondholders to receive an immediate payout upon confirmation.
The senior class of 14.5 percent subordinated debentures due 1998, scheduled to receive $165 million plus five-year warrants representing 6.5 percent of Macy’s fully diluted shares, saw their bonds rise to 50 on Monday from 48 on Friday.
There are two junior classes of bonds, each to receive only rights to purchase up to 25 percent of Macy’s fully diluted shares. The 14.5 subordinated debentures due 2001 traded at 17 on Monday, flat from Friday but down 2 from Thursday. The zero coupon bonds maturing in 2006 traded at 4 on Monday, unchanged from Friday and down slightly from Thursday.
Shares of Federated Department Stores, which submitted its own proposal for Macy’s on Friday after the market closed, inched up 1/8 to 21 1/2 on the New York Stock Exchange Monday.