Department store giant Macy’s Inc (M) reported a 45% dip in earnings for the fourth quarter hurt by a lackluster holiday season. The quarterly results exceeded analysts’ expectations while the company guided full-year 2019 earnings below the consensus estimates.
Net income attributable to the company’s shareholders plunged 45% to $740 million and earnings dipped 46% to $2.37 per share. Adjusted earnings decreased by 4.2% to $2.73 per share.
Net sales declined by 2.5% to $8.46 billion. Comparable sales on an owned basis were up 0.4%, and on an owned plus licensed basis, they were up 0.7%. The holiday season started off strong on the back of Black Friday and Cyber Week but then weakened by mid-December.
Looking ahead into the full year 2019, the company expects sales growth to be about flat and earnings, excluding settlement charges, impairment, and other costs, in the range of $3.05 to $3.25 per share. Comparable sales are anticipated to be in the range of flat to up 1% each on owned and on owned plus licensed basis.
For the fourth quarter, asset sale gains after-tax fell to $204 million from $230 million in the previous year quarter.
The company said it experienced another quarter of double-digit growth in digital. Macy’s also saw continued improvement in its brick and mortar trends with the Growth50 stores outperforming the fleet. Macy’s said it is heading into 2019 a stronger business than it was a year ago, with healthier stores, a growing e-commerce business and a mobile experience that is resonating with its customers.
The company has launched a comprehensive, multi-year program focused on growing its profitability rate by improving productivity across the enterprise. As an initial step in this, Macy’s announced a restructuring that lowers the complexity of the upper management structure. In addition to the expected 2019 savings, the company anticipates the activities to fuel the productivity plan over the next 3-5 years and contribute significantly to profitable growth.
Beginning in 2019, Macy’s predicts the restructuring actions to generate annual expense savings of $100 million. For fiscal 2018, the company recorded one-time charges of about $80 million pre-tax for restructuring activities.
Shares of Macy’s ended Monday’s regular session up 1.25% at $24.36 on the NYSE. Following the earnings release, the stock inched down 0.49% in the premarket session.