Macy's sees strong end to the year

Macy’s reported a stronger-than-expected end to the year on Tuesday.

The US department store chain, which owns Bloomingdale’s, also rejected a push from activist shareholder Jana Partners to spin out its e-commerce operations, announced a $2bn share buyback and upped the quarterly dividend by 5%.

Jeff Gennette, chief executive, said the retailer had "outperformed expectations on both the top and bottom lines every quarter in 2021, despite Covid-19 related disruptions, supply chain issues, labour shortages and elevated inflation".

Net sales for the three months to 29 January came in at $8.67bn, ahead of Wall Street forecasts and up on the $6.78bn achieved a year previously. Net income rose to $742m from $160m, while adjusted diluted earnings per share were $2.45, up on last year’s $0.80 and ahead of analyst forecasts for around $2.0.

Around 7.2m new customers shopped at Macy’s during the quarter, up 11% year-on-year, with 58% of new customers coming through the digital channel.

Hedge fund Jana Partners acquired a stake in the retailer last October, and urged it to consider spinning out its e-commerce business.

However, following a review of its e-commerce and bricks and mortar operations, Macy’s said it believed an "integrated, omnichannel Macy’s…will deliver greater value to our shareholders than a separation of digital and physical assets at either the enterprise or brand levels".

Gennette said: "We are more confident in our path forward as one integrated company. The board’s review reaffirmed our conviction that we are pursuing a robust strategy, and it provided us with a greater clarity on several initiatives that could be further accelerated to unlock additional value for our shareholders, which we are pursuing."

Looking to the current year, Macy’s said it expected "positive momentum" to continue, although it acknowledged challenges included inflation, supply chain pressures, labour shortages and the emergence of new Covid-19 variants.

It now expects net sales to come in between $24.46bn and $24.7bn, which would be between flat and 1.0% growth on 2021, while adjusted diluted earnings per share are forecast to come in between $4.13 and $4.52.