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Macy's (M) Q4 Earnings Exceeds Estimates, Sales Down Y/Y

Macy’s, Inc. M posted fourth-quarter fiscal 2020 results, with the top and the bottom line beating the Zacks Consensus Estimate. The company returned to profitability after posting a loss in the third quarter. However, sales and earnings declined from the year-ago quarter’s levels. Further, the company provided its view for fiscal 2021.

Adversities stemming from the pandemic were a drag on the company’s performance during the fourth quarter. Nevertheless, growth in the digital arena offered some cushion. Management stated that the company’s investments in digital innovation yielded well in the reported quarter. The company anticipates online sales to reach nearly $10 billion in the next three years. Additionally, the company continues to remain on track with the Polaris strategy for achieving overall business growth and efficiency.

We note that shares of the company have increased 40.7% in the past three months compared with the industry's rise of 58.3%.

Q4 in Details

Macy’s reported adjusted earnings of 80 cents per share, which surpassed the Zacks Consensus Estimate of 19 cents. However, the bottom line declined 62.3% from adjusted earnings of $2.12 reported in the year-ago quarter.

Net sales of $6,780 million came ahead of the Zacks Consensus Estimate of $6,498 million. However, the top line declined 18.7% on a year-over-year basis. Additionally, we note that comparable sales were down 17% on an owned basis and down 17.1% on an owned plus licensed basis. The dismal comparable sales performance was caused by continued challenges emerging from the COVID-19 pandemic.

Impressively, this Zacks Rank #3 (Hold) company’s digital sales surged 21% from the year-ago quarter’s figure and contributed 44% to net sales. Nearly 25% of online sales were fulfilled from stores, including curbside pickup and same-day delivery.

Net credit card revenues amounted to $258 million, up $19 million year on year.

Furthermore, gross margin went down 310 basis points (bps) to 33.7% year on year. Notably, delivery expenses increased 300 bps from the year-ago quarter’s figure.

SG&A expense declined 18.5% year over year to $2,045 million, thanks to improved expense management efforts.

Macy’s reported adjusted EBITDA of $789 million, which declined nearly 32% year on year.

Macys, Inc. Price, Consensus and EPS Surprise


Macys, Inc. price-consensus-eps-surprise-chart | Macys, Inc. Quote


Financial Aspects & Other Updates

Macy’s had cash and cash equivalents of $1,679 million as at the end of fiscal 2020. Merchandise inventories, as of Jan 30, 2021, amounted to $3,774 million. During the fourth quarter, inventory declined 27% year on year. The company ended the year with about $3 billion of untapped capacity in the new asset-based credit facility. Also it repaid $530 million worth debt during January, 2021. Long-term debt and shareholders’ equity were $4,407 million and $2,553 million, respectively, as of Jan 30, 2021.

Management stated that the Polaris Strategy significantly supported its performance during fiscal 2020. The strategy helped the company broaden assortments and boost digital experience. Management expects the Polaris Strategy to continue accelerating the company’s digital growth and omni-channel offerings.

Further, management highlighted that its Star Rewards Loyalty program witnessed an increase of 45% in Bronze tier members, during the fourth quarter.


Management’s view for fiscal 2021 takes into consideration the continued challenges emerging from the pandemic. It expects business momentum from the second half of the fiscal. That said, the company expects net sales in the bracket of $19.75-$20.75 billion in fiscal 2021. Further, adjusted earnings are anticipated in the range of 40-90 cents per share. The Zacks Consensus Estimate for sales and adjusted earnings in fiscal 2021 is currently pegged at $20.58 billion and 87 cents per share, respectively.

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