Macy’s takes e-route to China, sales and earnings decline in Q2

Macy's reporting sales and earnings for its second quarter of 2015, ended August 1, 2015 said that earnings were 64 cents per diluted share for the second quarter of 2015. This compares with earnings of 80 cents per diluted share in the second quarter of 2014. Earnings per share in the first half of 2015 were 1.19 dollars, compared with 1.40 dollars in the same period last year.

Sales in the second quarter of 2015 totaled 6.104 billion dollars, a decrease of 2.6 percent, compared with sales of 6.267 billion dollars in the same period last year. Comparable sales on an owned plus licensed basis were down by 1.5 percent, on an owned basis, second quarter comparable sales declined by 2.1 percent. Meanwhile, Macy’s has has formed a free-standing joint venture with Hong Kong-based Fung Retailing to explore retailing in China later this year.

“We are disappointed in our second quarter results, which were impacted by a variety of factors, both internal to the company and in the macroeconomic environment. We expect an improvement in trend beginning in the second half of 2015 based on a range of promising new strategic initiatives,” said Terry J. Lundgren, Macy's Chairman and Chief Executive Officer.

The company has initiated various measures to achieve sales growth in the short and long term such as piloting the first six Macy's Backstage off-price stores in New York City, beginning in September, with additional backstage store locations expected to be rolled out beginning in 2016, opening another 10 Bluemercury free-standing specialty beauty and spa locations before the end of 2015, bringing its store count to 76 and improving its omni-channel and digital expertise to improve its e-commerce offering and drive online sales. Four Bluemercury stores within Macy's locations will be opened this fall.

For the year to date, Macy's sales totaled 12.336 billion dollars, down 1.7 percent from total sales of 12.546 billion dollars in the first half of 2014. Comparable sales on an owned plus licensed basis were down by 0.8 percent year-to-date in 2015. On an owned basis, year-to-date comparable sales declined by 1.4 percent.

In the second quarter, the company closed Macy's stores in Pittsburgh, PA, and West Orange, NJ, and opened three new Bluemercury locations. In the fall season, scheduled store openings include a Macy's in Ponce, PR, a full-line Bloomingdale's in Honolulu, six Macy's Backstage, one Bloomingdale's Outlet, and 10 additional Bluemercury freestanding specialty stores. A Macy's store in Los Angeles, CA, is scheduled to close in the fourth quarter of 2015 in preparation for a new store to be built in the same mall.

Based on weaker-than-expected sales performance in the first half, the company is reducing its full-year 2015 guidance for comparable sales on an owned plus licensed basis to be approximately flat, compared with previous guidance for growth of approximately 2 percent. Comparable sales on an owned basis will be approximately 50 basis points lower than on an owned plus licensed basis. The company expects total sales to be down by approximately 1 percent in 2015. The company is maintaining its guidance for 2015 earnings per diluted share to be in the range of 4.70 dollars to 4.80 dollars as a result of the expected 250 million dollars gain on the sale of real estate in downtown Brooklyn.