Macy’s profits plummeted 52% in the fourth quarter of 2020, and sales also slipped nearly 19% as the coronavirus pandemic maintains a stranglehold on retail business across the nation.
Despite the sagging returns, the embattled department store appears to be weathering the unrelenting storm far better than anyone could have predicted.
»FROM JANUARY: 10,000 more retail stores expected to close under weight of pandemic
The retail giant still expects to rake in billions of dollars in sales this year, while losses were only expected to be a fraction of what analysts had previously forecast.
In a statement Tuesday, the chain said it anticipates 2021 will be “a recovery and rebuilding year as the company sets a foundation for growth.”
Shares rose more than 3% at the opening bell Tuesday on Wall Street with Macy’s predicting $20.75 billion in upcoming sales, exceeding the roughly $17 billion projected by economic analysts, according to The Associated Press.
For 2021, the company said its adjusted earnings per share would be in the range of 40 cents to 90 cents, far better than the $2.92 loss that had been predicted, according to FactSet.
For the final fiscal quarter of the year that ended Jan. 30, Macy’s reported profits of $160 million, or 50 cents a share. It was 80 cents per share if one-time costs are considered, and that was also far better than the per-share forecasts of 11 cents from industry analysts, according to a survey by FactSet.
Despite the for-better-or-worse outlook, the company is not out of the woods.
Profits are still well below $340 million, or $1.09 per share, for the same period in 2019, the last before COVID-19 emptied retail stores nationwide. Since then, the New York-based company furloughed most of its employees.
Macy’s began reopening stores last May, but the recovery has been painfully slow.
Quarterly sales were $6.78 billion, also edging out analyst projections. The company said business was driven by the home, beauty, jewelry and watch categories, growth in online sales and by acquiring new customers.
Sales at stores opened at least a year fell 17%, but online sales rose 21%. Elevated online sales may be here to stay. Macy’s said Tuesday that it expects digital sales to reach $10 billion within the next three years and that the online side will become even more profitable.
One market forecast from January predicted that as many as 10,000 stores could vanish from the retail landscape by the end of the year as the pandemic pushes more and more consumers to online shopping.
The entire retail landscape also remains on edge.
Clothing and apparel accounted for the most stores closed in 2020.
Since the start of the pandemic in March 2020, more than 3,000 stores that sell clothing, footwear and accessories have shuttered.
Ascena Retail Group, owner of Ann Taylor and Lane Bryant, was particularly hard hit with more than 1,100 store locations wiped off the map, more than any other rival. By the end of 2021, Ascena will close another 195 brick-and-mortar stores, according to previous reporting.
During the last year, just about every sector of retail business has been touched in some way.
The one positive sign in the Coresight research showed an uptick in business among discount retailers, which opened roughly 3,300 stores last year.
Malls, where Macy’s once thrived, are also struggling mightily under the weight of the pandemic.
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In early September, Macy’s announced it was planning to abandon its core position as an anchor tenant at some shopping malls around the country and move into smaller, standalone stores in an effort to regain footing.
Big department stores such as Macy’s had always been a mainstay at malls as they lured retail traffic to smaller shops, kiosks and food courts, providing much-needed financial stability.
But the pandemic crippled what had been a surefire business model as many shoppers bypassed malls in favor of buying online. High-end department stores in particular have struggled more than other retailers including Walmart and Target.
As millions of people have lost jobs or continue to work from home, the demand for clothing and apparel has all but vanished. Additionally, the rise of consignment and thrift stores — coupled with a dramatic surge in online shopping — has steered many consumers away from big stores.
Information provided by The Associated Press was used to supplement this report.
