Macys’ inventory levels continue to be negatively impacted as a result of protracted labor issues that tied up shipments at 29 West Coast ports for months, the company said during its fourth quarter and year-end analyst call on Tuesday. The company’s CFO said the resulting inventory issues will cause hits on sales, gross margins and expenses in the coming months.
Karen Hoguet, Macy’s CFO, said the labor issues – which were finally settled late Friday after nine months of negotiations and federal intervention – delayed 12% of the company’s incoming merchandise.
“At year-end, we were not yet experiencing a problem from the West Coast port slowdown,” Hoguet said. “Since then, however, our inventory levels have been negatively impacted particularly in apparel and accessories.” She added this impact has been incorporated into the company’s forecasts.
For the fourth quarter, Macys’ sales were $9.36 billion, up 1.8% from $9.20 billion in 2013. Same-store sales growth for the fourth quarter was 2.5%. For the full year, sales grew 0.6% to $28.10 billion, from $27.93 billion. Same-store sales growth in 2014 was 1.4%.
Macys reported quarterly earnings of $2.26 a share and net income of $793 million, down from $811 million or $2.16 a share in 2013. Adjusted earnings per share were $2.44, excluding $87 million in charges related to restructuring, store closings and other adjustments. Analysts expected adjusted earnings per share of $2.42, according to Zacks Investment Research.
In 2014, Macys achieved its long-term profitability goal by achieving a 14% adjusted EBITDA rate. “Our success in progressively increasing sales with double-digit increases in profitability in recent years has been the result of disciplined execution of our M.O.M. strategies (My Macys localization, omnichannel integration and Magic Selling) and continuous improvement in every aspect of our business,” said Macys Chairman and CEO Terry J. Lundgren in a prepared statement.
In fiscal 2014, the company opened five stores and closed 22. It operates 825 Macys and Bloomingdales stores in 45 states, the District of Columbia, Guam and Puerto Rico, and 13 Bloomingdales outlet stores.