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Macy’s swings to a loss, but shares rise as stronger-than-expected online growth boosts sales

Macy’s got a bigger-than-expected boost online during the latest quarter, even as its stores started to reopen during the coronavirus pandemic. 

The department store operator’s digital sales surged 53% from a year ago, as more shoppers visited its website to buy workout clothes and home decor. That helped it report a narrower loss and higher overall revenue than analysts were expecting. 

Still, with so much uncertainty in the industry ahead of the all-important holiday season, Chief Executive Jeff Gennette said Macy’s is planning conservatively for the remainder of 2020, and the company didn’t provide a financial forecast.

Macy’s shares were up around 5% in premarket trading. 

Here’s how the retailer did during its fiscal second quarter ended Aug. 1 compared with what analysts were expecting, based on Refinitiv data: 

  • Loss per share: 81 cents vs. a loss of $1.77, expected 
  • Revenue: $3.56 billion vs. $3.48 billion, expected 

Macy’s swung to a net loss of $431 million, or $1.39 a share, compared with a profit of $86 million, or 28 cents per share, a year ago. Excluding one-time charges, it lost 81 cents per share, better than the $1.77 loss per share forecast by analysts. 

Macy’s net sales dropped 35.8% to $3.56 billion from $5.55 billion a year ago, but that outpaced expectations of $3.48 billion. 

Sales online and at Macy’s stores open for at least 12 months, on and owned plus licensed basis, were down 35.1%. Analysts had been calling for a decline of 28.2%, according to Refinitiv estimates. 

Macy’s said its digital sales represented 54% of its total owned comparable sales, with its stores shut for a period of the quarter. 

The company said it ended the second quarter with a strong liquidity position. It had roughly $1.4 billion in cash on its balance sheet. 

Its inventories were down 29% from a year ago. 

America’s department stores have been struggling more than other retailers through the coronavirus crisis. A number, including Neiman Marcus and Stage Stores, have filed for bankruptcy in 2020. Increasingly, it seems, these companies aren’t viewed as worth salvaging. Lord & Taylor, after nearly two centuries in business, announced last week it is liquidating its remaining 38 stores. And talks among bidders to rescue J.C. Penney from bankruptcy have hit a stalemate, leaving it up to the companies’ lenders to strike some sort of last-minute deal for survival. 

Macy’s stock as of Tuesday’s market close is down more than 58% this year. It has a market cap of $2.2 billion. 

Find the full earnings press release from Macy’s here

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