Shares of Macyâs Inc. fell Tuesday after the department-store chain announced a plan to revitalize its business that includes closing 150 stores and that resulted in a $1 billion charge.
Macyâs said the plan also includes monetizing up to $750 million worth of assets. In a separate release, Macyâs reported fourth-quarter results that beat expectations.
âA bold new chapter serves as a strong call to action. It challenges the status quo to create a more modern Macyâs Inc.,â Chief Executive Tony Spring said on a call with analysts Tuesday. âWe are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value.â
The stock
M,
fell 2.6% in premarket trading.
Macyâs said the goal of the plan is to revitalize its sales assortment, modernize its shopping experience and bolster its position in the luxury market, where the companyâs Bloomingdaleâs and Bluemercury store brands have been outperformers.
Regarding store closures, Macyâs said it is looking to close 150 âunproductiveâ stores through 2026, including 50 by the end of the current fiscal year. The company also plans to increase investments in about 350 âgo-forwardâ stores and continue the expansion of its small-format stores.
Spring said that in fiscal year 2023, the 150 ânon-go-forwardâ locations represented about 25% of the companyâs gross square footage in fiscal 2023 but less than 10% of sales.
âWe have looked at value to operate versus value to close,â he said, adding that Macyâs has also looked at demand in the affected locations.
âThe value to monetize is greater than the value to operate in these stores,â said Spring, who was taking part in his first conference call since becoming Macyâs CEO earlier this month.
Over the next three years, Macyâs also plans to ârationalize and monetizeâ its supply-chain assets, which could lead to the monetization of $600 million to $750 million worth of assets.
For the fiscal fourth quarter to Feb. 3, Macyâs reported that it swung to a net loss of $71 million, or 26 cents a share, from $508 million, or $1.83 a share, in the same period a year ago.
Excluding nonrecurring items â such as the $1 billion charge, of which about $950 million is for store closures over the next three years â adjusted earnings per share came in at $2.45, which was well above the FactSet consensus of $1.98.
Total revenue fell 2.4% to $8.38 billion, but that was still above the FactSet consensus of $8.09 billion. Same-store sales, or sales of stores open at least a year, fell 5.4%, to miss expectations of a 4.7% decline.
For the current full fiscal year, the company expects adjusted EPS of $2.45 to $2.85, while the current FactSet consensus is for $2.77.
Macyâs stock has run up 29.5% over the past three months through Monday, while the SPDR S&P Retail exchange-traded fund
XRT
has rallied 17.8% and the S&P 500 index
SPX
has advanced 11.4%.
