Macy’s beats Q4 and FY15 earnings guidance

Macy's has reported fiscal 2015 earnings per diluted share of 3.22 dollars, or 3.77 dollars per diluted share excluding asset impairments, store closing and other costs. The company said that its 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," said Terry J. Lundgren, Chairman and CEO of Macy's, adding, “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.”

Q4 and FY15 earnings and sales review

For the full year 2015, adjusted earnings were 3.77 dollars 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 dollars to 3.59 dollars on the same basis. Comparable sales on an owned plus licensed basis in the full-year 2015 declined by 2.5 percent. On an owned basis, full-year 2015 comparable sales declined by 3 percent.

Sales in the 13-week fourth quarter of 2015 were down 5.3 percent. 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.

Outlook for the year ahead

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 dollars to 3.90 dollars per diluted share are expected in 2016.

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, a Macy's replacement store in Los Angeles, and Bloomingdale's in San Jose, CA and Norwalk, CT. 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.