Macy's(M) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2023, net sales were $8.12 billion, down 1.7% year-over-year, with comparable owned plus licensed sales down 4.2% [34] - Adjusted diluted EPS was $2.45 compared to $1.88 in the prior year [37] - Gross margin rate increased by 340 basis points to 37.5%, with merchandise margin up 260 basis points [35][36] - SG&A expense was $2.4 billion, down 2% from the prior year, representing 28.7% of total revenue [36] Business Line Data and Key Metrics Changes - Macy's net sales declined 2.5%, with comparable sales down 4.7% on an owned plus licensed basis [34] - Bloomingdale's net sales increased by 3.5%, while comparable sales decreased by 1.6% [35] - Bluemercury achieved net sales growth of 7.8% and comparable sales growth of 2.3% [35] Market Data and Key Metrics Changes - The company plans to close approximately 150 underproductive Macy's locations, which represent about 25% of gross square footage but less than 10% of sales [12][61] - Go-forward locations outperformed non-go-forward locations by approximately 500 basis points in comparable sales [14] Company Strategy and Development Direction - The strategy "A Bold New Chapter" aims to strengthen the Macy's nameplate, accelerate luxury growth, and modernize operations [5][7] - The company plans to close underperforming stores and invest in remaining locations, including opening 30 small-format stores over the next two years [17][61] - The focus is on enhancing the omnichannel experience and revitalizing product assortments to meet customer needs [10][20] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer resilience is better than expected, with inflation slowing but still impacting consumer spending [6] - Fiscal 2024 is viewed as a transition and investment year, with expectations for low single-digit comp growth and mid-single-digit EBITDA growth starting in 2025 [7][24] - The company is committed to returning to sustainable, profitable growth and enhancing shareholder value [31][44] Other Important Information - The company ended the year with over $1 billion in cash and generated $1.3 billion in operating cash flow [37] - The company plans to reduce overall capital expenditures to approximately $875 million in fiscal 2024 [41] Q&A Session Summary Question: Near-term actions to strengthen the Macy's nameplate - The focus is on addressing underproductive assets, enhancing digital experience, and expanding the portfolio [50][51] Question: Sales trends post-holiday - Sales were in line with expectations, with confidence in momentum for 2024 [52] Question: Factors driving guidance on comp sales - New inventory composition and the introduction of new brands are expected to drive sales [56] Question: Store closures and e-commerce sales protection - The closures are based on comprehensive diagnostics, and efforts will be made to capture demand through neighboring stores and digital outreach [60][61]