Macy's(US:M)2025-03-06 15:40Financial Data and Key Metrics Changes - Fourth quarter net sales were approximately $7.8 billion, down from $8.1 billion last year, in line with guidance [43] - Total enterprise comps increased by 0.2%, the highest quarterly results since Q1 2022 [43] - Adjusted EPS for the fourth quarter was $1.80, above guidance, primarily due to better-than-expected SG&A and credit card revenues [15][50] - Free cash flow grew by 71% to $679 million, including $283 million from asset monetization [12][51] - Year-end inventories increased by 2.5% year-over-year, with half of the increase attributed to the conversion to cost accounting [47] Business Line Data and Key Metrics Changes - Macy's net sales decreased by 5.3%, with comps down 0.9% [44] - Bloomingdale's achieved a positive 6.5% comp, the strongest fourth quarter volume in its history [22] - Bluemercury's net sales were up 2.4%, with comps rising 6.2% [44] - The First 50 locations at Macy's achieved a positive 1.2% comp, outperforming the rest of the fleet [16] Market Data and Key Metrics Changes - The luxury segment showed strong performance, with Bloomingdale's and Bluemercury continuing positive comp trends [21] - Macy's media network revenues increased by 7%, reflecting growth in advertisers and campaign counts [45] Company Strategy and Development Direction - The "Bold New Chapter" strategy focuses on improving store environments and enhancing the omnichannel customer experience [9][10] - The company plans to continue reducing CapEx while prioritizing investments that support growth and profitability [29] - The strategy includes closing underperforming stores to focus resources on go-forward locations [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic shifts made, while acknowledging the need for continued work [13] - The company is cautious about the external environment and consumer health, expecting pressure to continue in the near term [100][126] - The outlook for fiscal 2025 includes net sales of $21 billion to $21.4 billion, with comps expected to decline by 2% to 0.5% [55][56] Other Important Information - The company closed 64 non-go-forward Macy's stores ahead of the planned 50 closures, contributing to asset sale gains of $144 million [12][18] - The company is focused on enhancing its private brand offerings, with plans to address all home furnishing brands by mid-2025 [134] Q&A Session Summary Question: Areas of strength relative to same-store sales constraints - Management highlighted progress in the first year of the Bold New Chapter, including growth in the First 50 stores and closing underperforming locations [69][70] Question: Drivers of SG&A rate pressure - SG&A expenses were impacted by lower total revenue, but savings from store closures are being reinvested into customer experience initiatives [48][78] Question: Engaging various customer demographics - The company emphasized its multi-category business and strong partnerships, which allow for flexibility in navigating the uncertain environment [85][86] Question: Overall consumer health and promotional levels - Management noted that consumer health remains under pressure, with a focus on making offerings more compelling [99][103] Question: Trends in go-forward comps and category dynamics - The company observed strong performance in ready-to-wear and beauty categories, while the home business faced challenges [116][120] Question: Private label penetration and store closures - The company is working to rebuild its private label business and remains committed to closing approximately 150 stores by the end of fiscal 2026 [134][139]