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Getty Images Macy’s posted sequential comparable sales improvement over the holidays.
Macy’s Inc. posted holiday comparable sales results that were an improvement from the third quarter, but still fell short of good, according to GlobalData Retail Managing Director Neil Saunders.
Comparable sales on an owned basis fell 0.7%, and the decline was 0.6% on an owned-plus-licensed basis.
Comparable sales for the third quarter fell 3.5%. The FactSet consensus was for a 0.5% decline.
The FactSet consensus for the fourth quarter is for a 2.5% comparable sales decline.
Macy’s M, +0.54% stock was nearly unchanged in Wednesday trading.
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Chief Executive Jeff Gennette said gift merchandise and the marketing strategy were hits, particularly in the final 10 days before Christmas.
While Saunders got into the festive spirit at some stores and highlights online performance with its convenient fulfillment options, he still thinks store performance was “mediocre.”
“Unlike last year, Macy’s did not deliver sales growth,” Saunders said. “While not particularly surprising, this remains disappointing and underlines the various ongoing challenges faced by the iconic department store.”
Macy’s, like other retailers, also benefited from a strong consumer economy that includes higher wages and low unemployment.
“Without this fillip, which likely won’t be repeated as we move into 2020, Macy’s results would have been considerably worse,” Saunders said.
The fact that consumer conditions were worse last year but the company still posted growth shows the problems that Macy’s faces.
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“Macy’s performance [in holiday 2019] against this backdrop of a total retail market that grew by around 3.7% across November and December shows the group is still losing customers and market share at a rapid clip,” he said.
According to the Mastercard SpendingPulse, U.S. retail sales excluding autos grew 3.4% from Nov. 1 through Dec. 24. Online sales grew 18.8% during that period.
Apparel, a major category for Macy’s, grew 1% and jewelry was up 1.8%. However, department stores saw year-over-year sales slide 1.8%, though online sales growth was 6.9%, “emphasizing the importance of omnichannel offerings,” Mastercard SpendingPulse said.
“Despite a very favorable consumer spending environment, department stores have yet to catch a break,” wrote Moody’s analysts in a report published Dec. 9.
Moody’s cut its 2019 operating income forecast for the department stores to a 20% decline in 2019. Viewed on a two-year basis, Moody’s 2020 forecast will be down about 21%.
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“Department stores will continue to operate in this highly promotional environment, with further cost cuts difficult in the face of continued investment and tepid sales growth,” Moody’s wrote. “We expect no letup in this heavily promotional environment, which means inventory management will remain critical.”
Macy’s stock has shed 42.7% over the past year while the ProShares Decline of the Retail Store ETF EMTY, -0.44% fell 1% and the S&P 500 index SPX, +0.13% is up 26%.
