News: Macy’s forecasts upbeat 2021 sales on stimulus checks, online shoppers.
(Reuters) – Macy’s Inc forecast sales in 2021 well above Wall Street estimates on Tuesday. Significant gains are expected in the second half of the year as the retailer relies on growing its online business and returning customers to its department stores with COVID-19 vaccinations curbing the effects of the pandemic.
Macy’s positive outlook follows better than expected results in the holiday quarter as stimulus checks and strong online demand mitigated the blow from the health crisis.
Retailers are expected to benefit from another wave of stimulus-driven consumer spending in the coming months if US Congress passes the Biden government’s support plan, which includes sending a $ 1,400 check to households.
Jeff Gennette, chief executive officer, said Macy’s expects the first half of 2021 to be “very similar” to the fourth quarter ending January 30th. “We’ll see an improvement in clothing in the back half, but we’ll stay in the categories that were strong. “
Macy’s performed well in the resort area as local shoppers bought less formal work clothes and dresses. New categories have been added to meet emerging demand, including baby equipment, skin care devices, home fragrances, outdoor recreation and gourmet foods.
Macy’s expects sales between $ 19.75 billion and $ 20.75 billion in 2021, compared with analyst estimates of $ 20.13 billion according to IBES data from Refinitiv. Still, the company forecast a profit for the full year that was below expectations.
The company’s shares, which are up 29% over the past three months, were volatile on Tuesday morning. They were traded during a post-earnings call with investors and then fell as much as 8%. The stocks were roughly flat in late morning trading.
CFRA analyst Camilla Yanushevsky called Macy’s a “COVID-19 survivor” but added that “department store operating models and ratings are simply not sustainable in the long run”.
BECOMES ‘DIGITAL LED’
Much of the growth expected in 2021 could be due to Macy’s digital business. The company now expects annual online sales to reach $ 10 billion over the next three years.
In the fourth quarter, online sales rose 21% as the company pushed for faster delivery times and used stores to fulfill. This helped reduce inventory levels and attract new and younger customers.
According to Refinitiv’s IBES, sales in the same store declined 17% in the fourth quarter, compared to Wall Street estimates of 16.6%.
Department stores, which had been forced to close stores for months and almost completely revise business strategies, were hardest hit during the pandemic compared to “major” retailers like Walmart and Target.
Macy’s net sales declined 19% to $ 6.78 billion in the fourth quarter, but surpassed estimates of $ 6.50 billion. Without one-off effects, the profit was 80 cents per share and thus above the expectations of 12 cents.
Reporting by Aishwarya Venugopal in Bengaluru and Melissa Fares in New York; Editing by Sriraj Kalluvila, Steve Orlofsky and Ben Klayman
Original Source © Reuters