Macy's Q4 Earnings Surpass Estimates, Gross Margin Declines Y/Y

Macy’s, Inc. M has reported fourth-quarter fiscal 2024 results, wherein the top line lagged the Zacks Consensus Estimate but the bottom line surpassed the same. Revenues and earnings decreased from the year-ago quarter’s reported figures. Comparable sales (comps) fell on an owned basis.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.As the company concludes the first year of its Bold New Chapter strategy, investments in the customer experience have driven the highest comps of the year and the strongest performance in the past 11 quarters. Entering the second year, the company plans to scale successful initiatives for long-term profitable growth and greater shareholder value. The company has been focusing on enhancing the customer experience, maintaining operational excellence, and making strategic investments while generating a strong free cash flow and returning capital to shareholders. M shares have lost 20.4% in the past three months compared with the industry’s 20.1% decline.Macy's, Inc. Price, Consensus and EPS Surprise  Macy's, Inc. price-consensus-eps-surprise-chart | Macy's, Inc. QuoteMore on Macy’s Q4 ResultsThe Zacks Rank #3 (Hold) company has reported adjusted earnings of $1.80 per share, surpassing the Zacks Consensus Estimate of $1.55. However, the bottom line decreased 19.6% from $2.24 in the year-ago period.Net sales of $7,768 million missed the consensus estimate of $7,772 million. Also, the top line dipped 4.3% from the year-ago quarter. Comps fell 1.1% on an owned basis and increased 0.2% on an owned-plus-licensed-plus-marketplace basis from the prior-year quarter.Macy's ongoing business comps, including both go-forward locations and digital platforms across all nameplates, decreased 0.7% on an owned basis and increased 0.6% when including owned, licensed and marketplace channels.Net credit card revenues were $175 million, down 10.3% from the year-ago period due to a lower year-over-year profit share, including higher net credit losses. The metric represented 2.3% of sales, down 10 basis points from the year-ago quarter.Macy’s Media Network revenues increased 6.7% to $64 million, driven by continued growth in the number of advertisers and campaign counts. The metric represented 0.8% of sales, down 10 basis points from the year-ago quarter.Update on M’s Brand PerformanceComps across the Macy’s brand declined 1.9% year over year on an owned basis and 0.9% on an owned-plus-licensed-plus-marketplace basis. At the Bloomingdale’s brand, comps increased 4.8% on an owned basis and 6.5% on an owned-plus-licensed-plus-marketplace basis.Comps at the Bluemercury brand rose 6.2% on an owned basis, marking the 16th consecutive quarter of comps growth.Insight Into Macy’s Margins & ExpensesThe gross margin declined 80 basis points to 35.7%, whereas our estimate was pegged at 35.5%. The year-over-year change in the gross margin rate was influenced by Macy’s nameplate transition to cost accounting. Excluding this impact, the merchandise margin improved due to favorable shortage trends compared with the previous year, though this was offset by the product mix.The company reported selling, general and administrative (SG&A) expenses of $2.38 billion, down 1% from $2.41 billion in the year-ago period. This decline was driven by a disciplined approach to non-customer-facing costs while prioritizing investments aimed at driving sales. However, as a percentage of total revenues, SG&A expenses rose 100 basis points year over year to 29.7% due to lower total revenues. We anticipated 150 basis points of deleverage in SG&A expenses as a percentage of total revenues.Macy’s reported an adjusted EBITDA of $903 million, down 17.2% from an adjusted EBITDA of $1.09 billion in the year-ago quarter. We note that the adjusted EBITDA margin was 11.3%, down 170 basis points year over year.M’s Financial Snapshot: Cash, Inventory & Equity OverviewThe company ended the fiscal fourth quarter with cash and cash equivalents of $1.31 billion, long-term debt of $2.77 billion, and shareholders' equity of $4.55 billion. Merchandise inventories rose 2.5% on a year-over-year basis. In the fourth quarter of fiscal 2024, net cash provided by operating activities was $1.28 billion.Asset sale gains were flat year over year at $41 million. In the fourth quarter of fiscal 2024, these gains were primarily driven by the monetization of non-go-forward locations as part of the company’s Bold New Chapter strategy.M Stock Past Three-Month Performance Image Source: Zacks Investment Research Peek Into Macy’s FY25 GuidanceThe company expects net sales between $21 billion and $21.4 billion for fiscal 2025. Comparable owned-plus-licensed-plus-marketplace sales are projected to decline 2-0.5% year over year, while go-forward business comparable owned-plus-licensed-plus-marketplace sales are expected between a 2% dip and flat.Adjusted EBITDA as a percentage of total revenues is anticipated between 8.4% and 8.6%, whereas core adjusted EBITDA is forecast at 8-8.2%. Adjusted earnings per share are projected to fall $2.05-$2.25.The guidance reflects the impacts of fiscal 2024 store closures, which contributed $700 million to annual net sales.Stocks to ConsiderSome better-ranked stocks are Boot Barn Holdings, Inc. BOOT, Deckers Outdoor Corporation DECK and lululemon athletica inc. LULU.Boot Barn is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and revenues indicates growth of 21.4% and 14.9%, respectively, from the fiscal 2024 reported levels. BOOT delivered a trailing four-quarter average earnings surprise of 7.2%.Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently carries a Zacks Rank of 2 (Buy).The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 21.2% and 15.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It has a Zacks Rank of 2 at present. LULU delivered a 6.7% earnings surprise in the last reported quarter. The consensus estimate for lululemon’s fiscal 2025 earnings and revenues indicates growth of 12.5% and 9.7%, respectively, from the fiscal 2024 reported levels. LULU delivered a trailing four-quarter average earnings surprise of 6.7%.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Macy's, Inc. (M): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks