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BUSINESS A25
Wednesday 24 February

Macy’s 4Q profits down but encouraging signs for 2016

ANNE D’INNOCENZIO This photo shows signage at a Macy’s department store at the Hanover Mall in Hanover, Mass. was a good way to drive
AP Retail Writer Macy’s reported financial results Tuesday, Feb. 23, 2016. shoppers to Macy’s stores
NEW YORK (AP) — Macy’s and offer new products
wrapped up a weak fis- (AP Photo/Stephan Savoia) like baby gear and toys
cal year on an encourag- that the department store
ing note, but the nation’s better-than-expected that our setback last year playing defense against doesn’t normally carry.
largest department store profit and revenue for the is a setup for our come- discounters. Last year it It’s also simplifying discount-
retailer still sees challenges fourth quarter, as it benefits back,” said Chairman and opened Macy’s Backstage ing. The Cincinnati compa-
ahead. from an improving hous- CEO Terry Lundgren in a to go head to head with ny is taking deeper mark-
Macy’s, which also oper- ing market. A key revenue statement Tuesday. T.J. Maxx on its home turf. downs in the second and
ates Bloomingdale’s stores, metric jumped nearly 9 Lundgren has closed 40 Macy’s opened six Back- third round and eliminating
reported a 31 percent percent in the U.S. stores and trimmed staff stage pilot stores last fall coupons for those offer-
decline in fourth-quarter Macy’s is making a lot of in corporate offices and and plans to open just one ings. It’s creating separate
profits, dragged down by changes to reinvent the in stores to become more this year as it learns from areas in the store for those
store closings and other company. And investors nimble. The retailer has the tests. The company, clearance goods, which
costs. But the adjusted re- are banking on improve- strived to expand online however, is also carv- be rolled out throughout
sults beat Wall Street es- ment. Shares of Macy’s Inc. and has pursued other ave- ing out areas devoted to the chain.
timates and sales picked fell 36 percent over the past nues of growth. It acquired Backstage merchandise at “I think what happens is
up in the final weeks of the 12 months, but have begun Bluemercury, the upscale 15 full-price stores. Karen customers want simplicity.
holiday quarter as winter to climb back this year. beauty products and spa Hoguet, chief financial offi- And when you are looking
finally arrived, driving sales “I have reminded my team company. And it’s not cer at Macy’s, told investors for deep clearance goods,
of coats and boots higher. on a conference call that it you could just see the price
A very warm winter early of the item and not have to
on plagued retailers during do the math in your head,”
the most critical selling pe- said Hoguet. “Our hope is
riod of the year. that regular price selling will
But the company says that improve. There’s less clut-
it doesn’t expect to see a ter on the floor, by moving
key revenue figure turn pos- clearance merchandise
itive until the fourth quarter. into a separate area.”
Shares rose nearly 5 per- Hoguet also said Macy’s,
cent Tuesday to $43.10. facing pressure from inves-
The retailer had been a tors, is moving to unlock
stellar performer since the value from some of its real
recession, but over the last estate and said that the
year or so, it has stumbled, demand has been “very
including through the cru- high.”q
cial holiday shopping sea-
son. And weather wasn’t
the only factor.
Like many department
stores, Macy’s faces in-
creasing competition from
online retailers like Amazon.
com. It also has acknowl-
edged that customers are
spending more of their
money on restaurants, spas
and vacations, or sprucing
up their homes, rather than
clothes. And when they
do spend money on cloth-
ing, they have increasingly
walked through the doors
of discount stores like T.J.
Maxx. The spending trends
are playing out in retailers’
fourth-quarter earnings re-
sults. Last week, upscale
department store chain
Nordstrom Inc. reported
fourth-quarter results that
came short of analysts’ ex-
pectations, sending shares
down in after-market trad-
ing. J.C. Penney Co. and
Kohl’s Inc. are slated to re-
port fourth-quarter results
later this week.
But Home Depot Inc., the
nation’s largest improve-
ment chain, reported a