Macy’s Inc. forecast a Q1 2020 loss of up to $1.11 billion on Thursday, as the retailer was forced to close stores due to the ongoing COVID-19 pandemic. The Cincinnati-based retailer said it expects to post an operating loss of between $905 million and $1.11 billion. It also forecasts first-quarter sales in the range of $3 million to $3.03 billion, a plunge from $5.50 billion a year earlier.
Macy’s Inc. had earlier this month announced that it would report its Q1 2020 earnings on July 1 due to significant delays caused by the pandemic.
Statement from CEO Jeff Gennette:
“We closed all of our stores -- Macy’s, Bloomingdale’s and Bluemercury -- on March 18, which had a significant impact on our first-quarter results. Looking back, our performance in February was solid and in line with our expectations, but we saw a precipitous decline in sales with the stores closure in March.”
Macy’s Inc. cash and cash equivalents increased by 107 percent to $1.52 million at the end other quarter as debt rose to $5.66 billion from $4.72 billion. The retailer is in talks with financial institutions for additional aid that will improve its financial flexibility.
Macy’s stores reopened on May 4. Around 190 Macy’s and Bloomingdale’s stores are now operating at full capacity. Another 80 stories are most likely to reopen for Memorial Day weekend.
“We expect business to recover gradually,” Macy’s Chief Executive Officer Jeff Gennette said.
Q1 2020 Profits Take the COVID-19 Heat
The lockdown has revived online sales of retailers. Gennette said Macy’s could not offset the losses relating to store closures. Retailers have now taken to offering services such as curbside pickup to boost sales.
Macy’s Inc. recorded inventory writedowns of $300 million at the end of Q1 2020. Several categories such as fine jewelry, kids and home performed better than others during the lockdown period. Macy’s expects to expand its packaged food, home office and cooking and baking offerings, said Gennette.
Unlike its competitors. Macy’s Inc. has yet to face bankruptcy challenges. Although, it’s facing an additional debt in order to face the economic downturn.
About Macy’s Inc.
Macy’s is the largest department store operator by sales in the United States. Macy’s shares were down 1.38% at $5.00 in premarket trading.
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