Macy’s, Inc. (NYSE:M) today reported fourth quarter and fiscal 2017 results and is providing guidance for fiscal 2018 that reflects the company’s plan to return to comparable sales growth.
“We are committed to returning Macy’s, Inc. to comparable sales growth in 2018 and will build on the momentum we created in the fourth quarter of 2017. Macy’s, Inc. had a solid fourth quarter, including strong performance in January, and the full year exceeded our expectations for annual comparable sales and adjusted earnings per diluted share. We are encouraged to see a trend improvement in our brick & mortar business, and we had the 34th consecutive quarter of double-digit growth in our digital business,” said Jeff Gennette, Macy’s, Inc. chairman and chief executive officer. “Consumer spending was strong in the fourth quarter, and we were ready with improved execution and great products across all categories. We were disciplined with our promotional cadence and maintained a good inventory position. We head into 2018 with an improved base business, healthy inventories, a focused and engaged organization and a clear path to return Macy’s to growth.”
“In 2017, we tested and iterated a number of merchandising and strategic initiatives as part of our North Star Strategy. These initiatives contributed to our fourth quarter performance, and in 2018 we are ready to scale as well as test additional revenue-driving initiatives. We are also encouraged by customer response to our new Star Rewards loyalty program,” said Gennette. “On the path to growth in 2018, we will continue to improve our execution, strengthen our product offerings and make the necessary investments to be competitive with today’s demanding consumer.”
Sales in the fourth quarter of 2017 totaled $8.666 billion, an increase of 1.8 percent, compared with sales of $8.515 billion in the fourth quarter of 2016. Comparable sales on an owned basis were up 1.3 percent in the fourth quarter and up 1.4 percent on an owned plus licensed basis. Total sales in the fourth quarter of 2017 reflect a 14th week of sales, whereas comparable sales are on the same 13-week basis as fiscal 2016.
Sales in fiscal 2017 totaled $24.837 billion, down 3.7 percent from total sales of $25.778 billion in fiscal 2016. Comparable sales on an owned basis declined 2.2 percent in fiscal 2017. Comparable sales on an owned plus licensed basis declined by 1.9 percent in fiscal 2017. Total sales for fiscal 2017 reflect a 53rd week of sales, whereas comparable sales are on the same 52-week basis as fiscal 2016.
Macy’s, Inc.’s operating income for the fourth quarter of 2017 totaled $1.213 billion, or 14.0 percent of sales, compared to $815 million, or 9.6 percent of sales, for the fourth quarter of 2016. Operating income for the fourth quarter of 2017 totaled $1.397 billion, or 16.1 percent of sales, excluding restructuring and other costs of $152 million and non-cash retirement plan settlement charges of $32 million. Operating income for the fourth quarter of 2017 includes $234 million in book gains for the sale of the Union Square Men’s building (or 48 cents per diluted share), which was sold in fiscal 2016. Operating income for the fourth quarter of 2016 totaled $1.062 billion, or 12.5 percent of sales, excluding $230 million of impairments, store closings and other costs and non-cash retirement plan settlement charges of $17 million.
For fiscal 2017, Macy’s, Inc.’s operating income totaled $1.807 billion, or 7.3 percent of sales, compared with operating income of $1.315 billion, or 5.1 percent of sales, for fiscal 2016. Operating income for fiscal 2017 totaled $2.098 billion, or 8.4 percent of sales, excluding $186 million of restructuring and other costs and $105 million of non-cash retirement plan settlement charges.
Macy’s, Inc.’s fiscal 2016 operating income included $479 million of impairments, store closing and other costs. Excluding these items, as well as non-cash settlement charges related to the company’s retirement plans of $98 million, operating income for fiscal 2016 was $1.892 billion or 7.3 percent of sales.
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