Macy’s predicts optimistic 2021 sales on stimulus checks, online shoppers

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In this news, we discuss the Macy’s predicts optimistic 2021 sales on stimulus checks, online shoppers

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(Reuters) – Macy’s Inc predicts 2021 sales well above Wall Street estimates on Tuesday, with big gains expected in the second half of the year, with the retailer betting on online growth and returning customers to its department stores during COVID-19 vaccinations curb the impact of the pandemic.

Macy’s bullish outlook follows better-than-expected results in the holiday quarter, as stimulus checks and strong online demand dampened the blow from the health crisis.

Retailers are set to benefit from another wave of stimulus-driven consumer spending in the coming months if the US Congress passes the Biden administration’s backstop plan that includes sending households a $ 1,400 check. .

CEO Jeff Gennette said Macy’s expects the first half of 2021 to be “very similar” to the fourth quarter, which ended Jan. 30. “The second half, we’ll start to see improvement in apparel, but stay strong in the categories that were strong. “

As homebound shoppers cut back on their purchases of work clothes and formal dresses, Macy’s has seen casual wear, home and beauty perform well during the holidays. It added new categories to meet emerging demand, including baby items, skin care devices, home fragrances, outdoor recreation, and fine dining.

Macy’s expects sales of between $ 19.75 billion and $ 20.75 billion for 2021, compared to analysts’ estimate of $ 20.13 billion, according to IBES data by Refinitiv. The company continues to forecast lower than expected full year profits.

Shares of the company, which have risen 29% in the past three months, were volatile on Tuesday morning, trading on a post-earnings call with investors, then fell as low as 8%. Stocks were roughly flat late in the morning.

CFRA analyst Camilla Yanushevsky called Macy a “COVID-19 survivor,” but added that in the long run, “department store operating models and ratings are just not sustainable.”

BECOME ‘DIGITALY-LED’

Much of the growth expected in 2021 could be driven by Macy’s digital business. The company now expects annual online sales to reach $ 10 billion over the next three years.

In the fourth quarter, online sales jumped 21% as the company pressed for faster delivery times as stores were used for order processing. This has helped reduce inventory levels and attract new, younger customers.

Still, same-store-owned sales fell 17% in the fourth quarter, compared to Wall Street estimates of a 16.6% drop, according to IBES data by Refinitiv.

Forced to close stores for months and almost completely overhaul their business strategies, department stores have been among the hardest hit during the pandemic, compared to ‘essential’ retailers such as Walmart and Target.

Macy’s net sales fell about 19% to $ 6.78 billion in the fourth quarter, but topped estimates by $ 6.50 billion. Excluding non-recurring items, its profit was 80 cents per share, above expectations of 12 cents.

Reporting by Aishwarya Venugopal in Bengaluru and Melissa Fares in New York; Editing by Sriraj Kalluvila, Steve Orlofsky and Ben Klayman

Original © Thomson Reuters

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