Macy's(US:M)2024-12-11 17:00Financial Data and Key Metrics Changes - Total net sales for Q3 2024 were $4.7 billion, down 2.4% year-over-year, consistent with previous reports [43][54] - Adjusted EPS for Q3 was $0.04, benefiting from asset sale gains, but negatively impacted by delivery expense adjustments [15][53] - Gross margin rate was 39.6%, down 60 basis points year-over-year, with merchandise margin declining 70 basis points [48][49] - SG&A expenses were $2.1 billion, representing 42.1% of total revenue, reflecting a disciplined approach to cost control [51] Business Line Data and Key Metrics Changes - The first 50 Macy's locations reported a positive comp of 1.9%, marking three consecutive quarters of growth [18][67] - Bloomingdale's net sales increased by 1.4% with comps rising 3.2%, driven by women's advanced contemporary apparel and beauty products [26][27] - Bluemercury achieved a 3.3% comp increase, marking its 15th consecutive quarter of positive comps [29] Market Data and Key Metrics Changes - The overall enterprise comps were down 1.3%, with Macy's nameplate comps down 2.2% [43][62] - The luxury segments, including Bloomingdale's and Bluemercury, are expected to collectively grow by 2% to 2.5% [62] Company Strategy and Development Direction - The company is focused on its "Bold New Chapter" strategy, aiming for sustainable profitable growth through improved customer experience and operational efficiency [10][17] - The strategy includes closing approximately 65 non-go-forward locations, up from previous estimates, to enhance profitability [53][115] - Investments in staffing and merchandising are being made to improve customer experience, particularly in high-touch categories like women's shoes and handbags [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about quarter-to-date sales trends, which remain above Q3 levels, despite challenges from unseasonably warm weather [34][56] - The company anticipates a competitive environment for the holiday season but is encouraged by recent improvements in customer engagement and sales [80][96] - The outlook for Q4 2024 includes expected net sales of $7.8 billion to $8 billion, with a cautious approach to consumer spending [57][62] Other Important Information - The company has identified and implemented additional controls to prevent accounting issues from recurring, following an investigation into erroneous entries [11][13] - The company plans to continue its focus on improving inventory management and fulfillment efficiency [32][50] Q&A Session Summary Question: Drivers of comp improvement and sustainability - Management highlighted the positive performance of the First 50 locations as a leading indicator of growth potential, with expectations for expansion in 2025 [74][92] Question: Confidence in test locations and profitability - Management expressed confidence in the transferability of successful initiatives from test locations to broader operations, emphasizing the importance of customer response [90][91] Question: Gross margin outlook and promotional environment - Management acknowledged the competitive landscape and consumer pressure, indicating adjustments to promotional strategies while maintaining focus on profitability [94][96] Question: Performance of smaller format stores and margin analysis - Management reported positive responses to smaller format stores and discussed the impact of weather and competition on merchandise margins [116][121] Question: Guidance assumptions and private brand development - Management indicated that the guidance reflects sequential improvements across various business dimensions, with private brands playing a key role in meeting consumer value expectations [126][130]