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Macy’s posted better-than-expected earnings this quarter, the first following its February announcement that it would close around 150 of its namesake stores by 2026. It beat analysts’ forecasts for revenue and EPS, increased its full-year EPS guidance, and bumped up the lower end of its net sales forecast.
But, compared with last year, the retailer’s still struggling. Its net income was down to $62 million, versus $155 million in the first quarter of last year, and its diluted EPS of $0.22 was a significant drop from the $0.56 it stood at this time last year.
Last quarter, Macy’s announced a strategy to try to turn its fortunes around by strengthening the brand, leaning into luxury, and streamlining operations. Early signs indicate the strategy may be working: Macy’s “First 50” stores, which are, well, the first 50 stores to be refreshed, saw net sales increase 3.4% over Q1 of last year, compared with Macy’s stores as a whole, where net sales dropped 1.6%. The First 50 stores saw increased foot traffic and higher conversion rates, chairman and CEO Tony Spring said during an earnings call, and their net promoter scores rose by 500 basis points year-over-year.
Improved deployment of staff is helping the First 50 stores prosper, Spring said. They’re benefiting from “having the right people in place at the right time” in key areas such as fitting rooms, jewelry, big-ticket items, and shoes, he said.
Macy’s COO and CFO, Adrian Mitchell, said the company expects consumers to “remain under pressure for the balance of the year” and Spring said customers would continue to be selective around discretionary spending. In some categories, such as skincare, though, “there is no price resistance,” Spring noted.
That’s borne out in Macy’s line of Bluemercury beauty stores, where same-store sales have increased for the 13th consecutive quarter. Same-store sales at Bluemercury locations were up 4.3% over Q1 of last year. Macy’s plans to open 30 new Bluemercury stores and remodel 30 others.