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Macy’s reports fourth quarter and FY2015 results

RBR Staff Writer Published 24 February 2016

Macy’s reported fiscal 2015 earnings per diluted share of $3.22, or $3.77 per diluted share excluding asset impairments, store closing and other costs.

The company's fourth quarter and full-year sales and earnings exceed the company's most recent guidance.

"While 2015 was challenging, our sales trend improved in January as the weather turned colder in northern climate zones and Macy's and Bloomingdale's were well-stocked in coats, boots, sweaters, gloves, hats and other seasonal goods. As the year ended, our inventories were in good shape (up by 0.7 percent on a comp basis)," said Terry J. Lundgren, chairman and chief executive officer of Macy's, Inc. "We are encouraged by the way the business responded going into 2016, and we believe we are well positioned to stabilize sales levels this year as we lay the foundation for enhanced shareholder value and sustained, long-term profitable growth. Given our determination to rise above our disappointing 2015 performance, I have reminded my team that our setback last year is a setup for our comeback.

"Moving ahead, Macy's remains rooted in the M.O.M. strategies that have resonated with customers seeking fashion, value, quality and convenience as customers shop us in stores and digitally. But we are redefining, updating and redirecting our efforts in each letter of M.O.M. to carry us forward - with My Macy's evolving from localization to personalization, Omnichannel now focused on providing Omni Choices for customers, and engaging customers by making Magic Connections," Lundgren said. "After the previous six consecutive years of cumulative success, 2015 reminded us that retailing is a dynamic business that requires continuous reinvention as the customer evolves. Today, we are examining every aspect of our business so we can grow profitable sales and re-attain our goal over time of an EBITDA rate as a percent of sales of 14 percent.

"We should not lose sight of the investments we made in 2015 that will help us down the road. We registered yet another year of double-digit growth in our online business, fueled by exceptional increases in mobile traffic and increased conversions, with exciting new offerings from macys.com and bloomingdales.com. We expanded our online capacity with a new state-of-the-art fulfillment center in Tulsa, OK. We announced licensed department arrangements with companies including LensCrafters, Men's Wearhouse and Best Buy to add new categories to the Macy's store assortment. We completed the acquisition of Bluemercury, which added capabilities to our signature beauty business. We developed and launched Macy's Backstage, which will be piloted as an in-store concept this spring. And we began initial testing of online selling in China in a new joint venture with a Hong Kong-based partner," he added.

For the full year 2015, adjusted earnings (excluding items described below) were $3.77 per diluted share. Due primarily to higher sales and lower expenses, this exceeds the company's most recent guidance for 2015 earnings of $3.54 to $3.59 on the same basis. Comparable sales on an owned plus licensed basis in the full-year 2015 declined by 2.5 percent. This compares to the most recent guidance for 2015 sales on an owned plus licensed basis to be down 2.7 percent. On an owned basis, full-year 2015 comparable sales declined by 3.0 percent.

Macy's, Inc., through its financial advisors, has begun the process of contacting potentially interested parties with respect to partnership or joint venture transactions involving the company's flagship and mall-based properties. There has been a high degree of initial interest at this preliminary stage but it is premature to comment further at this point.

For the 52 weeks of fiscal 2015, Macy's, Inc. sales totaled $27.079 billion, down 3.7 percent from total sales of $28.105 billion in fiscal 2014. Comparable sales on an owned plus licensed basis for the full-year 2015 declined by 2.5 percent. On an owned basis, full-year 2015 comparable sales were down 3.0 percent.

Sales in the 13-week fourth quarter of 2015 totaled $8.869 billion, down 5.3 percent from total sales of $9.364 billion in the fourth quarter of 2014. Comparable sales on an owned plus licensed basis for the fourth quarter were down 4.3 percent. On an owned basis, fourth quarter comparable sales declined by 4.8 percent.

In fiscal 2015, the company opened a total of 26 stores and closed 40 stores, all as previously announced. New stores included Macy's in Ponce, PR, Bloomingdale's in Honolulu, HI, 15 Bluemercury self-standing stores, six Macy's Backstage self-standing stores and three Bloomingdale's Outlets. The 40 closed Macy's stores were listed in the company's announcement of Jan. 6, 2016.

For fiscal 2015, Macy's, Inc.'s operating income totaled $2.039 billion or 7.5 percent of sales, compared with operating income of $2.800 billion or 10.0 percent of sales for fiscal 2014. Macy's, Inc.'s fiscal 2015 operating income included $288 million of impairments, store closing and other costs. The $288 million included $148 million of asset impairment charges primarily related to store closings announced in January 2016 and $123 million of severance and other human resources-related costs associated with organizational changes and store closings announced in January 2016. Excluding these items, operating income for fiscal 2015 was $2.327 billion or 8.6 percent of sales. Macy's, Inc.'s fiscal 2014 operating income included expenses and asset impairment charges of $87 million associated with merchandising and marketing restructuring, store and field adjustments, and store closings. Excluding these items, operating income for fiscal 2014 was $2.887 billion or 10.3 percent of sales.

Macy's, Inc.'s operating income totaled $936 million or 10.6 percent of sales for the 13-week quarter ended Jan. 30, 2016, compared with operating income of $1.364 billion or 14.6 percent of sales for the fourth quarter of fiscal 2014. Macy's, Inc.'s fourth quarter 2015 operating income included $177 million of impairments, store closing and other costs. The $177 million included $37 million of asset impairment charges primarily related to store closings announced in January 2016 and $123 million of severance and other human resources-related costs associated with organizational changes and store closings announced in January 2016. Excluding these items, operating income for the fourth quarter of 2015 was $1.113 billion or 12.6 percent of sales. Fourth quarter 2014 operating income included asset impairment charges of $87 million associated with merchandising and marketing restructuring, store and field adjustments, and store closings. Excluding these items, operating income for the fourth quarter of 2014 was $1.451 billion or 15.5 percent of sales.

Operating income for fourth quarter and full-year 2015 includes $84 million of the approximately $250 million gain to be realized from the sale of Brooklyn real estate. The remainder of the gain is expected to be booked in fiscal 2016 and fiscal 2017.

Earnings per diluted share on an adjusted basis for fiscal 2015 were $3.77 after excluding $288 million ($184 million after tax or 55 cents per diluted share) of impairments, store closing and other costs.

For the full-year fiscal 2014, Macy's, Inc. earned $4.22 per diluted share. Earnings per diluted share for fiscal 2014 were $4.40 after excluding charges of $87 million ($54 million after tax or 15 cents per diluted share) associated with previously announced merchandising and marketing restructuring, store and field adjustments, store closings and asset impairments, as well as $17 million ($10 million after tax or 3 cents per diluted share) of expense related to the make-whole premium for the early retirement of debt.

Fourth quarter 2015 earnings were $1.73 per diluted share, or $2.09 excluding $177 million ($115 million after tax or 36 cents per diluted share) of impairments, store closing and other costs.

Fourth quarter 2014 earnings were $2.26 per diluted share, or $2.44 excluding charges of $87 million ($54 million after tax or 15 cents per diluted share) associated with previously announced merchandising and marketing restructuring, store and field adjustments, store closings and asset impairments, as well as $17 million ($10 million after tax or 3 cents per diluted share) of expense related to the make-whole premium for the early retirement of debt.

Net cash provided by operating activities was $1.984 billion in fiscal 2015, compared with $2.709 billion in fiscal 2014. Net cash used by investing activities in fiscal 2015 was $1.092 billion, compared with $970 million in the previous year. Thus, net cash provided before financing activities was $892 million in fiscal 2015, compared with $1.739 billion in fiscal 2014.

In fiscal 2015, the company repurchased approximately 34.8 million shares of its common stock for approximately $2.0 billion. At Jan. 30, 2016, the company had remaining authorization to repurchase up to approximately $500 million of its common stock.

The company expects comparable sales on an owned plus licensed basis to decline by approximately 1 percent in fiscal 2016, with comparable sales on an owned basis to be approximately 50 basis points lower. Total sales are expected to be down by approximately 2 percent in fiscal 2016, reflecting the 40 stores closed in 2015. Earnings of $3.80 to $3.90 per diluted share are expected in 2016. Capital expenditures for 2016 are expected to be approximately $900 million, compared with the capital expenditures of approximately $1.1 billion in fiscal 2015.

In fiscal 2016, the company expects to open a new Macy's store in Kapolei, HI, as well as approximately 42 additional Bluemercury locations (24 freestanding and 18 inside Macy's) and 16 Macy's Backstage locations (1 freestanding and 15 inside Macy's). Announced new stores in future years include Macy's in Murray, UT (2017), a Macy's replacement store in Los Angeles, CA (2017), and Bloomingdale's in San Jose, CA (2017) and Norwalk, CT (2018). In addition, a new Bloomingdale's store is expected to open in 2017 in Kuwait, and new Macy's and Bloomingdale's stores are planned to open in Abu Dhabi, United Arab Emirates, in 2018 under license agreements with Al Tayer Group.

 

 

 

 

 

 



Source: Company Press Release