Investors searching for any hints that a retail recovery is underway got a glimmer of hope today, with struggling department-store operator Macy’s Inc. inching back to normalcy.
The department store chain is still losing money as sales remain well below pre-pandemic levels, but Chief Executive Officer Jeff Gennette said demand is picking up across all of its brands. Its adjusted net loss of $251 million in the second quarter ended Aug. 1 beat the $538 million loss anticipated by analysts.
“Taken in isolation, today’s results from Macy’s would be disastrous,” Neil Saunders, an analyst at GlobalData Retail, said in a note. “However, after a calamitous first quarter, the numbers signal that trade at the iconic department store is starting to come back, even if progress is relatively slow.”
The results were read as a more upbeat sign for investors after the coronavirus pandemic prompted a significant pullback in spending on apparel and other discretionary goods earlier this year. More than two dozen consumer-facing companies have filed for bankruptcy in recent months, and many others are struggling to survive.
Macy’s shares soared as much as 8.3% today in New York. The stock had fallen 59% this year through Tuesday’s close.
Performance picked up across each of Macy’s brands, including Bloomingdale’s and Bluemercury. While net revenue fell 36% year-over-year, the drop was an improvement over the prior quarter. Comparable sales, a key measure of retailer performance, fell 35%, roughly in line with expectations.
Online sales provided the retailer a needed boost, up 53% for the quarter. Sales in physical stores were down 61%, executives said on the conference call.
Apparel sales remain weak, with second-quarter sales of dresses and tailored clothing falling 70%, Macy’s said. Meanwhile, high-end mattresses, furniture and diamonds are performing disproportionately strong, the company said, noting that it plans to lean into luxury items more going forward.
With most of its stores reopened by the end of June, including Macy’s crucial Manhattan flagship, Gennette said his top priority is now the holiday season. He said he’s approaching the vital shopping period “conservatively.”
While the company declined to provide a formal outlook for the rest of the year, it said it expects comparable owned and licensed sales for the fall season down in the low- to mid-20 percentage range.
The company also said it’s planning to open several small, off-mall stores in the next two years, plus test a smaller format off-mall Bloomingdale’s.
“The past six months presented challenges that we never imagined,” Gennette said on the call. “It forced us to make significant changes in how we run our business.”