Macy's reports mixed Q4 with less-than-expected sales drop

Dive Brief:

Macy’s Tuesday reported Q4 same-store sales fell 4.3% on an owned plus licensed basis, beating its own expectation of a 4.7% drop. Overall 2015 same-store sales fell 2.5% on the same basis.
Tepid sales of winter apparel muted the retailer’s performance over the holiday season and accounted for 80% of the Q4 sales dip, according to CEO Terry J. Lundgren, but January saw healthier sales as the weather turned colder.
The department store’s Q4 net sales fell to $8.87 billion, beating Thomson Reuters estimates of $8.83 billion.

Dive Insight:

January’s cold weather helped lift Macy's fourth quarter sales, but its long-term prospects remain hard to predict in a tough retail environment. Department stores are still working to adapt to the declining influence of the American mall, as well as increased competition from big-box stores.

“Americans have learned to buy many of their basic needs in off-price or big box rather than regional malls,” Nick Egelanian, president of retail real estate consulting firm SiteWorks, told Retail Dive late last year.

Lundgren in a statement said that the retailer’s investments—including e-commerce efforts, a new “state-of-the-art fulfillment center,” concessions in stores with LensCrafters, Men’s Wearhouse, Best Buy and others, its off-price Backstage stores, China sales, and the company’s beauty-and-spa Bluemercury acquisition—should be noted because they bode well for the coming year.

Lundgren also referred to the retailer’s “M.O.M. strategies,” short for “My Macy’s localization, Omnichannel, and MAGIC selling," efforts to revamp its personalization and localized product assortments and omnichannel efforts. Lundgren expressed continued confidence in its prospects despite its dismal year.

“As the year ended, our inventories were in good shape (up by 0.7% on a comp basis),” Lundgren said in a statement. “We are encouraged by the way the business responded going into 2016, and we believe we are well positioned to stabilize sales levels this year as we lay the foundation for enhanced shareholder value and sustained, long-term profitable growth. Given our determination to rise above our disappointing 2015 performance, I have reminded my team that our setback last year is a setup for our comeback."

But the question for Macy's, and many department stores, is whether they can adapt to changing consumer shopping habits fast enough.