There was a lot of excitement when Tony Spring, the new CEO of Macy’s, discussed the past but also unveiled his vision for the future. Macy’s 4th quarter diluted earnings per share were down $(0.26) compared to last year’s $1.83 and adjusted EPS was $2.25 compared to last year’s $1.88 per share.
The significant announcement was that Macy’s has a repositioning plan which is Tony Spring’s vision for the future. It is a bold statement that repositions Macy’s effort to enhance the customer experience and deliver growth in the years ahead. It was developed by the Macy’s leadership team with the full support of the board of directors.
Tony Spring outlined his plan:
1. Strengthen Macy’s nameplate. Macy’s plans to put the customer first by prioritizing areas that will return top-line growth through revitalizing the assortment to improve both relevance and value. In addition to modernizing the shopping environment to facilitate a convenient, easy, and frictionless customer environment. It will have digital excellence, and focus on resources by closing approximately 150 underproductive locations, including about 50 by the end of the current fiscal year. Spring also promised that the remaining 350 go-forward locations would get priority investments. In addition, he promised to continue the expansion of small-format stores for Macy’s and Bloomingdale’s. There are currently 12 Macy’s small format stores and 3 Bloomingdale’s Bloomies.
2. Accelerate Luxury Growth. Macy’s plans to take advantage of its leadership position in the luxury market, where Bloomingdale’s and Bluemercury have outperformed within the Macy’s Inc. portfolio.
3. Omni-demand. Macy’s plans to align operations to anticipate future omni-demand and deliver a more efficient operating model that will allow the organization to better serve the customers.
4. Financial outcome. With a strong foundation, Macy’s Inc. is in a position to successfully drive sustainable, profitable growth and create shareholder value in 2025. Macy’s Inc. expects:
a. Low single-digit annual sales growth
b. Annual SG&A dollar growth below the historic inflation rate of 2%-3%
c. Annual adjusted EBITDA dollar growth in the mid-single-digit range.
d. Capital spending below 2024 level
e. Free cash flow to return to pre-pandemic levels
Financial outcomes do not include any potential impact of the proposed credit card late fee ruling.
POSTSCRIPT: It is exciting to hear about a positive plan for the future. 2024 will be a year of transition, but next year there should be some positive results after some of the weak stores have been closed and some of the merchandising plans have been implemented.
Read the full article here